With a larger-than-average three-digit injection possibly waiting in the wings from this week’s Energy Information Administration (EIA) storage data, natural gas futures were trading slightly lower early Thursday. The June Nymex futures contract was off 0.7 cents to $2.594/MMBtu just after 8:30 a.m. ET.
Estimates for the 10:30 a.m. report have EIA unveiling a low-triple-digit build for the week ended May 10. A Bloomberg survey as of Wednesday afternoon produced a median estimate of 104 Bcf, based on 12 responses ranging from 93 Bcf to 125 Bcf. A Reuters survey also showed consensus landing on a 104 Bcf build, based on 16 responses ranging from 93 Bcf to 125 Bcf.
Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at 105 Bcf, while NGI’s model predicted a 102 Bcf injection. Last year, EIA recorded a 104 Bcf build for the period, and the five-year average is a build of 89 Bcf.
“It was cooler than normal across the central U.S. and Midwest, while warmer than normal across the West and East” during this week’s storage report period, NatGasWeather said. “Our algorithm sees it at 104-105 Bcf, although it’s a trickier build to predict.”
As for the overnight weather data, the forecaster said the European data saw few changes, while the Global Forecast System (GFS) trended hotter.
“Both models held hotter trends across the southern and eastern U.S. next week, although with the GFS also trending hotter for the Week 2 forecast...The pattern is still expected to result in larger than normal builds, just not quite as massive as they would be with a little less heat across the southern U.S.,” NatGasWeather said. “The pattern would look a bit more intimidating if it wasn’t for the European model showing heat fizzling in intensity and coverage May 27-31.”
If the European data were to trend warmer for this period, “the markets could notice,” since it could whittle down a potentially “hefty build to something a little less impressive.”
Focus on this week’s potentially plump report, combined with the market’s inability to break through resistance below $2.67, prompted Wednesday’s 5.8-cent sell-off, according to EBW Analytics Group CEO Andy Weissman.
“The fever finally broke in the natural gas futures market,” Weissman said. “...Over the next several weeks, the prospect of five or more triple-digit injections into storage is likely to make it difficult to rally further, and could weigh heavily on cash market prices.”
Next week’s injection is on track to climb into the low-100s Bcf area, similar to this week’s, Weissman said. “But the last two injections in May are likely to be whoppers -- pushing cash market prices down further and creating greater downward pressure on the June contract.”
June crude oil futures were up 87 cents to $62.89/bbl shortly after 8:30 a.m. ET, while June RBOB gasoline was trading about 3.8 cents higher at $2.0506/gal.