Coming off demand gains in the overnight guidance, and with traders looking ahead to the release of the latest Energy Information Administration (EIA) storage data, natural gas futures were trading slightly higher early Thursday. The expiring October Nymex contract was up 1.2 cents to $2.514/MMBtu at around 8:40 a.m. ET; November was trading 0.9 cents higher at $2.527.
Estimates ahead of this week’s EIA report, scheduled for 10:30 a.m. ET, showed the market anticipating an injection in the upper 80s or low 90s Bcf for the period ended Sept. 20. A Bloomberg survey produced a median 92 Bcf, with estimates from 79 Bcf to 100 Bcf. A Wall Street Journal survey showed an average 89 Bcf, with a range of 83 Bcf to 96 Bcf. A Reuters survey also landed on 89 Bcf, with responses from 79 Bcf up to 96 Bcf.
Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at 92 Bcf. NGI’s model predicted a 90 Bcf injection.
A build in line with market expectations this week would easily top both the 51 Bcf build EIA recorded for the year-ago period and the five-year average 74 Bcf injection.
“It was warmer than normal over most of the U.S.” aside from “slightly cool” conditions for the West Coast and New England during this week’s report period, according to NatGasWeather.
As for the overnight data, the forecaster highlighted a “rather hefty” gain in both heating and cooling degree days for all models except for the European, which advertised more modest demand gains.
“Where demand was added overnight was Oct. 5-10 by favoring stronger cool shots into the northern and eastern U.S.,” NatGasWeather said. The Global Forecast System (GFS) “was more aggressive advancing stronger cooling into the U.S. than the European model, which added a little demand but not nearly to the extent of the GFS.
“This makes today’s mid-day data of interest to see if the GFS backs off or if the European model adds demand. Either way, it’s still too early for it to be considered ominously cold, but the natural gas markets could certainly notice” the increase in total degree days in the forecast.
Looking nearer term, overall Lower 48 demand is set to grow over the next week, driven by warm temperatures in the East, South Central and Midwest, according to Genscape Inc. The firm is modeling Lower 48 demand of 71.0 Bcf/d over the next seven days, 3.5 Bcf/d higher week/week and 0.2 Bcf/d more than the year-ago period.
“Genscape meteorologists are forecasting warmer-than-average temperatures through the middle of next week in the East, South Central and Midwest, while winter temperatures in the Pacific begin to materialize,” Genscape senior natural gas analyst Rick Margolin said. “Compared to the week prior, overall demand in the East, South Central and Midwest is forecast to increase by 4.7 Bcf/d” over the next week.
The Pacific is forecast to see a 1.2 Bcf/d drop in power demand over the next seven days, according to Margolin.
November crude oil futures were trading 32 cents lower at $56.17/bbl at around 8:40 a.m. ET, while October RBOB gasoline was trading fractionally higher at $1.6298/gal.