July natural gas was set to open Thursday about 4.7 cents higher at around $2.932/MMBtu, with overnight guidance trending hotter for the second of week of June, while the market was turning its attention to the 10:30 a.m. ET release of weekly government storage data.
NatGasWeather.com said the overnight data maintained hotter trends from the Global Forecast System “and trended hotter in both the Canadian and European models June 9-14 by favoring a stronger ridge over the central and southern U.S. by expanding it a bit further north into the Midwest and east into the Southeast.
“There’s still expected to be bouts of comfortable temperatures across the northern and eastern U.S. next week and the following, just with very warm breaks between systems,” the firm said. “Thus, an overall hotter trend held from midday for the second week of June. But is it hot enough for the market’s liking?”
Radiant Solutions said its 11-15 day forecast Thursday “features an eastward shift in coverage of aboves versus previous expectations, with warm changes focused in the Midwest. This results in a period featuring above normal temperatures from the Southwest through the Midcontinent; and while the East is also warmer” compared to Wednesday’s outlook, “we hold the Northeast at to marginally below normal levels.
“There remains concern in the Southwest,” where the European model “continues to promote an increase in monsoonal moisture and less intense heat,” Radiant said.
Meanwhile, estimates for this week’s Energy Information Administration (EIA) storage report show the market anticipating a triple-digit injection slightly larger than the five-year average.
A Reuters survey of traders and analysts on average predicted a 102 Bcf injection for the week ended May 25, with responses ranging from 88 Bcf to 107 Bcf. A Bloomberg survey produced a median 102 Bcf injection, with responses from 96 Bcf to 107 Bcf.
Last year EIA recorded an 80 Bcf injection, and the five-year average is an injection of 97 Bcf.
ION Energy called for a 105 Bcf build, while Price Futures Group estimated a build of 101 Bcf. The Intercontinental Exchange EIA Financial Weekly Index settled Wednesday at an injection of 104 Bcf for Thursday’s report.
Genscape Inc. said its estimate is for 107 Bcf build, which would be the season’s largest so far, “and possibly the largest since June 2015,” analyst Rick Margolin said. “Compared to degree days and seasonality, a 107 Bcf injection would be loose by 1.3 Bcf/d compared to the prior five-year average.”
Genscape’s daily supply and demand data showed production during the report week averaging 78.4 Bcf/d, up 0.6 Bcf/d week/week (w/w), and showed 6.2 Bcf/d of imports from Canada, Margolin said.
“On the demand side, power burns averaged 25.7 Bcf/d, up just 0.2 Bcf/d from the week prior, while the remainder of the domestic demand components fell w/w,” he said. “The market also got looser due to the 0.7 Bcf/d w/w drop” in liquefied natural gas exports.
The natural gas market could be in for more range-bound action as it awaits another catalyst, according to EBW Analytics Group CEO Andy Weissman.
“Absent a significant shift in the weather forecast or a major surprise” from EIA’s weekly storage report, “range-bound trading is likely to continue for at least five to seven days longer,” Weissman said. “The likelihood of a forecast shift or a major storage surprise is low...An injection at or above 105 Bcf or well below 100 Bcf most likely would be needed to significantly move the needle price-wise.”
July crude oil was set to open about 73 cents lower at around $67.48/bbl, while June RBOB gasoline was trading fractionally higher at around $2.1876/gal.