Continuing to gain steam in the lead-up to the latest round of government inventory data, natural gas futures were trading several cents higher early Thursday. The October Nymex futures contract was trading 2.9 cents higher at $2.251/MMBtu shortly after 8:30 a.m. ET.
Estimates ahead of Thursday’s Energy Information Administration (EIA) storage report, scheduled for release at 10:30 a.m. ET, have been pointing to a near-average injection in the mid 50s Bcf for the week ended Aug. 23.
A Bloomberg survey of 13 analysts called for an injection between 45 Bcf to 61 Bcf, with a median of 56 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures settled at a 60 Bcf injection, while NGI projected a 51 Bcf build.
Last year, the EIA recorded a 66 Bcf injection for the similar week, while the five-year average injection stands at 57 Bcf.
“It was hotter than normal over most of the country besides the north-central U.S.,” NatGasWeather said of this week’s storage report period. “Our algorithm predicts a build of 55 Bcf, likely near neutral to expectations.”
As for overnight changes in the weather data, the forecaster said most models added around 2-3 cooling degree days to the outlook, building on hotter trends Wednesday.
“Any further hotter trends and the markets are likely to notice. But without them, we still view the coming pattern as not hot enough over enough of the country the next 15 days” with the exception of a brief warm spell next week in the northern and eastern United States, NatGasWeather said.
“We continue to think it will be of considerable interest to see how prices trade after today’s EIA report, if bears sell the recent bounce or if there’s enough uncertainty regarding Hurricane Dorian and September weather patterns to hold prices above $2.20 before the long weekend break.”
The National Hurricane Center’s (NHC) 5 a.m. ET advisory had Dorian located about 150 miles north-northwest of San Juan, Puerto Rico. The storm was carrying maximum sustained winds of 85 mph.
“Dorian is moving toward the northwest near 13 mph, and this general motion is expected to continue through Friday,” NHC said. “A west-northwestward motion is forecast to begin Friday night and continue into the weekend. On this track, Dorian should move over the Atlantic well east of the southeastern and central Bahamas today and on Friday, and approach the northwestern Bahamas on Saturday.”
NHC’s forecast cone for the storm’s probable path had Dorian approaching the eastern Florida coast by Monday.
Meanwhile, looking back at the recent price gains, which occurred despite a generally mild forecast outlook, EBW Analytics Group analysts said futures have shown “surprising strength.”
“It is not yet clear whether this new strength for gas is due to technical factors and short-covering or attributable to other factors,” the EBW analysts said. “Potential bullish drivers include traders hoping that natural gas will rally seasonally, and a potential premium for prices at Henry Hub” as liquefied natural gas feed gas demand ramps up.
“This morning’s EIA report could set the tone for today’s trading,” according to EBW. A build near consensus around 57-59 Bcf “could take some steam out of the market; a significantly smaller build could seriously challenge resistance at $2.27.”
October crude oil futures were trading 49 cents higher at $56.27/bbl just after 8:30 a.m. ET, while September RBOB gasoline was up fractionally to $1.6836/gal.