With traders turning their attention to the latest government inventory data and overnight forecasts continuing to advertise widespread heat for next week, natural gas futures were trading a few cents higher early Thursday. The September Nymex futures contract was up 2.6 cents to $2.169/MMBtu shortly after 8:30 a.m. ET.
Estimates this week show the majority of analysts expecting the Energy Information Administration’s (EIA) 10:30 a.m. ET report to reveal an injection in the high 50s Bcf for the period ended Aug. 9. That would compare with last year’s 35 Bcf injection and the 49 Bcf five-year average, according to EIA.
A Bloomberg survey of 11 analysts had an injection range of 45 Bcf to 65 Bcf, with a median of 58 Bcf. A Reuters poll produced the same range and median. Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at 61 Bcf, while NGI projected a smaller 52 Bcf injection.
A week ago, EIA reported a 55 Bcf injection for the period ended Aug. 2, a number that came in higher than the five-year average but on the low side of expectations.
“It was hotter than normal over most of the country besides portions of the northern Plains and east-central U.S.” during this week’s report period, NatGasWeather said. “Our algorithm predicts a build of 58-59 Bcf. It’s certainly problematic that most of the country was hotter than normal, yet today’s build is still expected to print larger than normal.”
As for the overnight weather data, the forecaster said hotter trends for next week held, with temperatures for most of the country still expected to warm to above normal to drive strong demand.
“However, the latest data continues to favor heat fading Aug. 24-29 as weather systems impact both the northern and southern U.S. with coverage of 90s decreasing considerably,” NatGasWeather said. “No change to our view as the pattern next week is plenty hot enough, but the pattern after isn’t.”
The higher prices overnight suggest “the natural gas markets are so far content holding gains on the week that have likely been aided by strong power burns and cash prices across Texas and the southern U.S. due to recent and current heat, as well as expectations for more impressive heat spreading up the East Coast next week.”
This week’s EIA report could determine whether the September contract is able to finish above $2.15 on a closing basis, analysts at EBW Analytics Group said.
“Over the past week and a half, as hot weather has extended further into August, the forward curve has been slowly inching higher,” EBW said. “Today’s weekly storage report could determine whether the $2.15 barrier will finally be broken.”
EBW is projecting a slightly higher build than estimates at 61 Bcf. “A build several Bcf lower” than consensus “could push the September contract back to $2.20 -- and potentially a few cents beyond.”
September crude oil futures were down 40 cents to $54.83/bbl shortly after 8:30 a.m. ET, while September RBOB gasoline was trading about 1.8 cents lower at $1.6578/gal.