September natural gas futures were set to open Thursday near even at around $2.939/MMBtu, with traders holding their fire ahead of the Energy Information Administration (EIA) storage report.
Estimates ahead of the 10:30 a.m. ET release show the market expecting EIA to report a lighter-than-average injection for the week ending Aug. 10 that would widen already large inventory deficits.
A Bloomberg survey of 17 market participants had a range of 17 Bcf to 54 Bcf, with both the average and median pointing to a 29 Bcf injection. A Reuters poll of 20 market participants pointed to an average build of 31 Bcf, with estimates ranging from 24 Bcf to 38 Bcf.
Bespoke projected a 31 Bcf build, while Kyle Cooper of IAF Advisors estimated a build of 28 Bcf. Intercontinental Exchange settled at 28 Bcf.
A 29 Bcf print would expand the year-over-year deficit to 691 Bcf and increase the deficit to the five-year average to 605 Bcf.
During the similar period last year, 49 Bcf was injected into storage, while the five-year average injection stands at 56 Bcf. As of Aug. 3, Lower 48 gas stocks stood at 2,354 Bcf, 22% below year-ago levels and 19.5% below the five-year average.
Genscape Inc. senior natural gas analyst Rick Margolin said Thursday his firm is looking for a 30 Bcf build. Even though that would come in well below the year-ago and five-year-average figures, “it is actually loose to the five-year when accounting for degree days and normal seasonality,” he said.
Genscape’s Spring Rock daily production estimate for the report week averaged 80.3 Bcf/d, 0.17 Bcf/d higher week/week (w/w) on the strength of gains in the Northeast, Permian Basin and Haynesville Shale, according to Margolin.
Total demand for the report week was an estimated 80.5 Bcf/d, including 38.3 Bcf/d of gas burns, according to Genscape’s proprietary estimate, nearly 2.7 Bcf/d higher w/w “and this summer’s second strongest weekly average,” Margolin said.
Every EIA region except for the South Central currently sits at or below five-year minimum inventories. While inventory deficits stand to increase after this week’s report, “our estimates for the current and upcoming gas weeks show relatively stronger injection numbers on the back of notably milder temperatures scrubbing cooling demand loads and exports to Mexico, along with already-observable upticks in Lower 48 production,” he said.
Turning to weather, Radiant Solutions said its forecast for the eastern half of the country trended cooler in the six- to 10-day (Aug. 21-25) period.
“A storm system tracks through the Midwest and East during the early stages of this period, and with stronger high pressure being left in its wake, the forecast features cooler changes across the Eastern Half,” Radiant said. “This includes a round of below normal temperatures through the Plains and southern Midwest.”
Radiant’s latest 11-15 day (Aug. 26-30) forecast continued to show “above normal temperatures being focused in the West, while a round of aboves also progress through the Midwest and East. Changes, however, are slightly cooler in the West and warmer around the Great Lakes.”
September crude oil was set to open about 18 cents higher at around $65.19/bbl, while September RBOB gasoline was trading fractionally lower at around $1.9882/gal.