With the market awaiting the latest natural gas storage data from the Energy Information Administration (EIA), futures were trading close to even early Thursday. The May Nymex futures contract, set to expire Friday, was unchanged at $2.462/MMBtu shortly after 8:30 a.m. ET. The June contract was up 0.2 cents at $2.502.
Estimates for this week’s EIA report, due at 10:30 a.m. ET, have been pointing to an injection in the upper 80 to lower 90 Bcf range, which would flip the year/year inventory comparison from a deficit to a surplus. A Bloomberg survey of 17 analysts showed a build ranging from 69 Bcf to 98 Bcf, with a median of 92 Bcf. A Wall Street Journal poll of 13 market participants had estimates ranging from an increase of 82 Bcf to 94 Bcf, with an average build of 89 Bcf. A Reuters survey of 19 analysts ranged from a 69 Bcf to 95 Bcf build, with a median of 91 Bcf.
Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at a build of 90 Bcf. NGI’s model predicted an 82 Bcf build, slightly below consensus.
Last year, the EIA recorded a 20 Bcf withdrawal for the period, while the five-year average is a 47 Bcf injection. Inventories as of April 12 sat at 1,247 Bcf, only 57 Bcf below the year-ago level and 414 Bcf below the five-year average.
“It was warmer than normal over the West and East, while cooler than normal over the Midwest, Central U.S. and Texas” during this week’s EIA report period, according to NatGasWeather. “Our algorithm sees it to the bearish side at 96-97 Bcf. Due to comfortable temperatures over much of the country this past week, next week’s build will be even larger and likely over 120 Bcf.”
As for the overnight weather data, both the Global Forecast System and European models showed further cool trends for the central and northern parts of the country this weekend into next week, the forecaster said, adding that models have added 25 heating degree days to the outlook since last week.
“It still isn’t cold enough to result in a smaller than normal build but has trended the EIA storage report three weeks out to near or under 100 Bcf,” NatGasWeather said. “This cooler trending period would likely have garnered more of a reaction from the markets” if not for forecasts showing a comfortable pattern setting up over the northern United States May 3-7.
“No change to our thinking, as we’re still expecting bearish weather headwinds to continue, just not quite as strong this weekend through the first half of next week,” the forecaster said. “The net result will continue the current streak of larger than normal builds for at least another four weeks, proving even with continued cooler trends, weather patterns are still bearish in terms of large builds.”
Bespoke Weather Services said its sentiment was slightly bullish heading into Thursday’s session while acknowledging the risks surrounding the EIA report.
“Fundamentals data is still showing signs of gradual improvement, with the last couple of days of burns again revised slightly tighter despite being low absolute demand days,” the firm said. “Production remains down well off the highs,” though liquefied natural gas exports “remain off their highs as well, flat day/day. We do not normally have to emphasize weather changes much at this point in the year, but for late April into early May the added demand is significant over the last several days.”
Projected demand for the next couple weeks now exceeds year-ago levels “for the first time in a long time...This added demand should help further tighten up burns going forward. Prices can remain choppy through cash and EIA, but a modest move to $2.55-2.60 in the June contract can occur over the next week,” according to Bespoke.
A little after 8:30 a.m. ET, June crude oil futures were trading 19 cents higher at $66.08/bbl, while May RBOB gasoline was up 2.1 cents to $2.1495/gal.