November natural gas is set to open a penny lower Thursday morning at $2.86 as traders note little change in the ongoing shortfall of heating load, and expect a below average storage build in a morning government report. Overnight oil markets fell.
"The latest 11-15 day period forecast is warmer than previous forecasts over the central and eastern U.S., aided by the day shift," said WSI Corp. in a morning report to clients. "The western U.S. is cooler.” Gas-weighted heating degree days “are -1.6 for Days 11-14 to 52.2 for the whole period. These are 15.4 below average.
"There is guidance to support risks in either direction throughout the forecast period. The beginning of the period has minor cooler risks over the southern and eastern U.S. The interior West, Plains and northern tier could run warmer late in the period."
Storage bulls will have to navigate less demand in the days ahead. "Consumption demand across the Lower 48 has reached an average of just over 56.7 Bcf/d for the week ending Oct. 20, nearly 2 Bcf/d below the prior five-year average for the comparable week," reported Callie Kolbe, analyst with PointLogic Energy.
"Significantly softer residential/commercial demand has been the culprit this year as compared to prior years. Power demand on the other hand has come in nearly 2.4 Bcf/d higher this week as compared to the prior five-year average. Oct. 19's consumption level is expected to come in lower day-on-day at 55.9 Bcf/d before rising [Friday] to 57 Bcf/d."
PointLogic data shows month-to-date demand running at 55.35 Bcf/d or 2.57 ahead of last year. Season-to-date is at 56.43 Bcf/d or 3.41 less than a year ago.
Thursday's storage report looks to shave the long term storage surplus, but recent milder temperatures may swing that trend back around. Last year 77 Bcf was injected and the five-year pace stands at 78 Bcf. Estimates are coming in about 20 Bcf less. ION Energy of Houston predicts a build of 44 Bcf and Citi Futures is calculating an injection of 63 Bcf. A Reuters survey of 26 traders and analysts showed an average 55 Bcf with a range of +44 Bcf to + 80 Bcf.
In overnight Globex trading November crude oil fell 82 cents to $51.22/bbl and November RBOB gasoline dropped 2 cents to $1.6279/gal.