With the market still awaiting more clarity on the amount of cold arriving later this month, natural gas futures were trading close to even early Friday. The November Nymex contract was down 0.8 cents to $2.210/MMBtu just before 8:40 a.m. ET.
Guidance trended somewhat colder overnight, with the American and European models showing potential for a new “shot of colder air” late in the 11-15 day period, according to Bespoke Weather Services.
“We would not consider this bullish at this time, as it needs to roll forward in the forecast some in order to gain credibility, and it could wind up being just another push of colder air into the central U.S., not impacting the population centers in the East in an appreciable way,” Bespoke said. “...Nonetheless, it may be enough to impact the market’s weather sentiment if it shows up again on the midday runs.
“...We still believe the pattern ultimately will favor below normal demand overall, but hints of cold in the modeling could support the market heading into the weekend, even if it ultimately fails to roll forward.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 98 Bcf injection into storage facilities for the week ending Oct. 4, a figure that fell well within the wide range of expectations. The reported injection was several Bcf above last year’s 91 Bcf as well as the five-year average of 89 Bcf, according to EIA.
Total working gas in storage rose to 3,415 Bcf, which puts inventories at a 472 Bcf surplus over last year and just 9 Bcf below the five-year average, according to EIA.
Genscape Inc. said the injection implies the market was about 5.7 Bcf/d looser than the five-year average when compared to degree days and normal seasonality.
“However, the additional looseness in this week’s stat should be taken with a large grain of salt,” senior natural gas analyst Rick Margolin said. “Residential/commercial demand always lags during the initial increase in heating degree days at the beginning of the heating season for a variety of reasons that include residual heat in buildings and the fact that some people haven’t yet turned on their furnaces.”
That inventories now sit so close to the five-year average represents a “remarkable tightening considering injection season opened at a 495 Bcf deficit.”
With prices eroding this week, the market could be poised to test a “major support level” at $2.18 for the November contract, according to analysts at EBW Analytics Group. January is nearing “an even stronger support level” at $2.51.
“With space heating demand beginning to ramp up (albeit modestly), natural gas may be close to a near-term bottom,” the EBW analysts said. “The key remains late October/early November weather. No clear signal has yet emerged. Until this changes, price movements may be small.”
November crude oil futures were trading 71 cents higher at $54.26/bbl shortly before 8:40 a.m. ET, while November RBOB gasoline was up about 1.4 cents to $1.6369/gal.