With a mix of warmer overnight forecast trends and potentially supportive changes in the latest exports and production data, natural gas futures were trading close to even early Friday. The May Nymex contract was up 0.4 cents to $2.668/MMBtu shortly after 8:30 a.m. ET.
Bespoke Weather Services viewed guidance as slightly warmer overnight.
“Deviations from normal on any given day still remain quite small, with the best cold risks continuing to stay in the middle of the nation, not having a significant impact on most of the major population centers,” Bespoke said.
Bespoke said its sentiment remained neutral as of early Friday, pointing to recent balance data that looked “incredibly weak,” but with an uptick in liquefied natural gas (LNG) exports potentially supportive for prices.
“The main item we see in this morning’s data that can allow the $2.65 floor to hold firm is a bump up in LNG exports, which can keep cash prices firmer,” the forecaster said. “They still remain well off the highs but have made notable gains in the last couple days as Sabine Pass ramps back up. Production also remains lower this morning due to some springtime maintenance that is ongoing.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported that implied flows reflected a 29 Bcf injection into storage inventories for the week ending April 5. The net change week/week, however, was a smaller 25 Bcf build, due to multiple reclassifications in the Pacific and South Central regions that moved some stocks into base gas, rather than working gas.
While on the bullish side of estimates, the EIA’s reported build came in much larger than last year’s 20 Bcf withdrawal and the five-year average injection of 5 Bcf. Working gas in storage as of April 5 stood at 1,155 Bcf, 183 Bcf below last year and 485 Bcf below the five-year average, according to EIA.
Compared to degree days and normal seasonality, this week’s 29 Bcf build is about 5.3 Bcf/d loose versus the five-year average, according to Genscape Inc. analysts Margaret Jones and Eric Fell.
“It is worth noting that last week the EIA reported an injection 7 Bcf larger than our call and 13 Bcf larger than the major surveys, suggesting to us that this week’s lower-than-expected stat may contain some unreported ‘make-up’ from last week’s highballer report,” the analysts said.
The May contract’s 3.6-cent sell-off Thursday, occurring despite a smaller-than-expected injection from EIA’s weekly report, could prove to be an “important turn” for prices, according to EBW Analytics Group CEO Andy Weissman.
“This decline is partially attributable to a significant drop in power sector use of natural gas due to nuclear plants coming back online, as well as to a moderately bearish shift” in midday forecasts Thursday, Weissman said.
“It is equally plausible, though, that hedge funds that had been focused on the rapid storage build-up expected between now and late May waited for the dust to settle after the storage report and then pounced in anticipation of the much larger injection likely to be reported next week. If so, the forward curve could be driven significantly lower soon.”
May crude oil futures were trading 90 cents higher at $64.48/bbl just after 8:30 a.m. ET, while May RBOB gasoline was up fractionally at $2.0358/gal.