With market participants seeking a better read on shoulder season balances and awaiting the latest weekly inventory data from the Energy Information Administration (EIA), natural gas futures were trading slightly lower early Thursday. The May Nymex futures contract was off 1.0 cent to $2.690/MMBtu shortly after 8:30 a.m. ET.
Estimates for this week’s EIA storage report point to an injection in the low 30 Bcf range for the period ended April 5. This would compare with last year’s 20 Bcf withdrawal and the five-year average injection of 5 Bcf.
A Bloomberg survey of 11 analysts showed estimates ranging from a 7 Bcf build to a 47 Bcf build, with a median of 33 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at a 38 Bcf build. NGI’s model projected a 29 Bcf injection.
Last week, the EIA reported a 23 Bcf build that left inventories as of March 29 at 1,130 Bcf.
“It was slightly cooler than normal over most of the eastern two thirds of the country, while slightly warm versus normal across the West” during this week’s report period, NatGasWeather said. “Our algorithm sees it at 33-34 Bcf” but with risks to the bearish side.
Looking at the overnight weather data, the Global Forecast System (GFS) came in “slightly cooler” after milder trends Wednesday; the European model, which had been cooler than the other datasets, lost some demand to better align with the GFS outlook, according to NatGasWeather.
“While the data has been inconsistent all week with exactly how much cooling would arrive after April 20, it’s still not expected to be cold enough to result in lighter than normal injections to supplies,” the forecaster said. “Essentially, these bouts of cooling across the northern U.S. are helpful but not impressive enough to overcome strong production, with further improvements to the supply picture expected through the end of the month.”
Bespoke Weather Services pointed to lower overall weather-driven demand expectations from the latest round of forecasts, but with “slight improvement” in the fundamentals data.
“Sentiment remains neutral heading into today’s EIA release, although this morning’s data does show some potential for improvement in balances, as production has tailed off a bit more from its highs the other weekend,” and liquefied natural gas (LNG) feed gas demand has ticked higher, Bespoke said.
“We are forecasting an injection of 35 Bcf for today’s report, which would reflect extremely loose balances for last week, but the market is seeing the potential for some re-tightening ahead, keeping May prices stuck around the $2.70 lvel for the last few days.
“At this time, we do not see a valid reason to deviate far from this level, as it seems like fair value until we see what the next move in balances will be.”
Lower 48 production has “been in somewhat of a retreat” recently as the market shifts into shoulder season mode, according to Genscape Inc.
“It is common this time of year to see pipelines and producers take advantage of weak shoulder season demand and prices to conduct maintenance,” Genscape senior natural gas analyst Rick Margolin said. “For the past five days we estimate production has been averaging a bit under 86.7 Bcf/d. This makes for a roughly 0.85 Bcf/d decline to the previous week, and is more than 2 Bcf/d off from March 31, when production rebounded to what was a 121-day high at the time.”
May crude oil was trading 75 cents lower at $63.86/bbl just after 8:30 a.m. ET, while May RBOB gasoline was off about 2.7 cents to $2.0424/gal.