July natural gas is expected to open 2 cents higher Thursday morning at $2.91 as the ongoing theme of summer heat continues and traders anticipate the release of bullish government storage figures. Overnight oil markets rose.
"Regarding the latest overnight weather data, hotter trends have been maintained for the last couple days of June over the East where highs will warm into the 80s to lower 90s," said Natgasweather.com in a morning note to clients.
"In addition, hotter trends occurred for the first week of July as strong high pressure dominates much of the country besides the northwest and northeast corners. The EC weather model had been the main hold out to the cooler side for early July, but finally trended notably hotter overnight."
Although Tropical Storm Cindy may not look terribly impressive, it did send Gulf of Mexico (GOM) production sharply lower. According to industry consultant Genscape production remains less than 71 Bcf/d as more GOM volumes have been lost due to Tropical Storm Cindy. "GoM production has fallen below 2 Bcf/d for the first time since October 2013, when Tropical Storm Karen targeted the coastal Louisiana/Texas border.
"[Wednesday's] volumes are more than 900 MMcf/d below last week's 14-day average prior to when evacuations began. So far we're seeing the largest drops in offshore Louisiana and Mississippi points. Destin sample volumes are down about 215 MMcf/d versus pre-evacuation levels, though it is worth noting many of the most affected points were already slated to drop for planned maintenance at the MP260 area, though that maintenance was to last just two days."
At 7 a.m CDT Tropical Storm Cindy was located 40 miles northwest of Lake Charles, LA and was moving to the north at 12 mph. Maximum sustained winds were 40 mph, and the National Hurricane Center expected further weakening as it moved onshore.
Traders are expecting bullish storage figures from the Energy Information Administration when it releases its inventory report at 10:30 a.m. EDT. Last year 63 Bcf were injected and the five-year rate stands at 82 Bcf.
Citi Futures Perspective estimates a build of 51 Bcf and Ritterbusch and Associates is up at 67 Bcf. A Reuters survey of 22 traders and analysts showed a 58 Bcf average with a range of +50 Bcf to +67 Bcf.
In overnight Globex trading August crude oil rose 31 cents to $42.84/bbl and August RBOB gasoline gained 2 cents to $1.4216/gal.