February natural gas was set to open Thursday about 4 cents higher at around $3.551, with the market turning its attention to the 10:30 a.m. EDT release of the Energy Information Administration (EIA) storage data.
The prompt month has surged this week amid forecasts for Arctic cold to return next month and expectations for EIA to report another mammoth withdrawal.
A Reuters survey of traders and analysts showed estimates for a 272 Bcf withdrawal on average for the week ending Jan. 19. The year-ago pull was 137 Bcf and a five-year average withdrawal is 164 Bcf. Responses for this week ranged from -248 Bcf to -287 Bcf.
Intercontinental Exchange futures were trading at -280 Bcf for the period as of Wednesday.
Stephen Smith Energy Associates, in its latest Weekly Gas Outlook, was calling for a 268 Bcf pull, versus a seasonally normal withdrawal of 174 Bcf based on 2006-2010 norms. PointLogic Energy estimated a withdrawal of 272 Bcf for the period, citing an uptick in demand in the South Central region for the week. Meanwhile, Kyle Cooper of ION Energy was looking for a pull of 271 Bcf.
Meanwhile, forecasters continue to watch weather patterns showing frigid Arctic temperatures sweeping through in the first week of February.
“The overnight weather data was a colder weather system into the eastern U.S. next week and with the first Arctic blast arriving Feb. 1-5,” said NatGasWeather.com. “There’s likely to be a break between Arctic shots around Feb. 6, then with uncertainty on exactly how far into the U.S. out of Canada a second Arctic blast will advance.
“Much of the data, including the European model, was rather mild over the South and East and not as intimidating by around Feb. 7-8.”
From a technical perspective, Powerhouse’s David Thompson, vice president, said following Wednesday’s close that the prompt month’s Relative Strength Index was at its highest level since 4Q2016 and that the contract could be “verging on overbought territory.”
“We clearly are a little bit extended on the bulls’ side,” he said. “A couple days of consolidation could alleviate that.”
With February set to expire in a few days, ICAP Technical Analysis analyst Brian LaRose highlighted the wide February/March spread in a note to clients Wednesday.
“If March is going to have any shot at picking up where the February contract leaves off the bulls will need to prevent March from slipping back below $2.795-2.725,” LaRose said. “Meanwhile, for February to have a crack at higher prices into expiry $3.378-3.385 will need to hold.”
March crude oil was set to open about 81 cents higher at around $66.42/bbl Thursday, while February RBOB gasoline was up nearly a penny to around $1.9261/gal.