September natural gas is set to open 2 cents higher Thursday morning at $2.95 as traders balance the disruptive effects of Gulf tropical activity with forecasts of moderating temperatures in key markets. Overnight oil markets were mixed.
Forecasters see a warm West and cool East going forward. "One of two main areas of concern include the impacts from Tropical Storm Harvey, which should make landfall Friday night along the central Texas coast as a low-end hurricane and stall out with significant flooding rain potential especially right along the coast (with disruptions for Houston and its ship channel)," said Matt Rogers, president of Commodity Weather Group in a morning report to clients.
"For the Midwest to East, relatively small slightly warmer changes occur in the one to five and six to 10 days, but then another Western ridge spike favors another Midwest to East cool push in the 11-15 day for which we made some additional cooler changes there (inside September). Eleven to 15 day forecast confidence dips slightly this morning though with more spread on the Euro ensemble."
In its 7 a.m. EDT report the National Hurricane Center (NHC) said Tropical Storm Harvey was located about 380 miles southeast of Port O'Connor, Texas and was moving to the north northwest at 10 mph. Wind speed was up to 60 mph and a track toward the northwest or north-northwest at a faster forward speed is expected for the next 48 hours. On the forecast track, Harvey will approach the southern Texas coast on Friday, NHC said.
The 10:30 a.m.EDT storage report by the Energy Information Administration (EIA) is expected to show inventory gains less than the long term averages. Last year 13 Bcf was injected and the five-year pace stands at 53 Bcf. Estimates are coming in around the mid-40 Bcf level. Citi Futures estimates a build of 37 Bcf and Ritterbusch and Associates is expecting a 40 Bcf increase. A Reuters poll of 25 traders and analysts showed an average 45 Bcf gain with a range of plus 33 Bcf to plus 50 Bcf.
In times of normal volatility markets will be pushed and pulled by the changing expectations of bulls and bears, but for the moment the futures are getting neither pushed nor pulled. "I was talking to some of our marketer clients whose business is derived from end-users that are looking to lock in price. They either have fear or greed, and right now it is complacency," said Elaine Levin, president of Powerhouse LLC, a Washington DC trading and risk management firm.
In overnight Globex trading October crude oil fell 20 cents to $48.21/bbl and October RBOB gasoline added 2 cents to $1.5437/gal.