As the market prepared to digest the latest round of government inventory data, expected to show a somewhat lighter build compared to the past few weeks, natural gas futures were trading several cents higher early Thursday. The November Nymex contract was up 3.4 cents to $2.316/MMBtu shortly after 8:40 a.m. ET.
Traders are expecting another larger-than-normal injection from this week’s Energy Information Administration (EIA) storage report, scheduled for 10:30 a.m. ET. But the build should come in lighter than the triple-digit injection reported last week, according to estimates.
A Bloomberg survey of seven analysts had injection estimates ranging from 81 Bcf to 93 Bcf. A Reuters poll of 18 analysts had the same range, with a median injection of 88 Bcf. NGI projected a 93 Bcf build.
Last year, the EIA recorded a 62 Bcf injection for the similar week, and the five-year average build is 73 Bcf.
“It was colder than normal over the central U.S., warmer than normal over the eastern U.S. and mixed over the western and southern U.S.” during the reporting period, according to NatGasWeather. “Our algorithm predicts a build of 87 Bcf, a touch bullish to market expectations.”
As for the overnight guidance, NatGasWeather viewed changes as mixed, with some datasets trending slightly warmer and others slightly colder.
“The overall theme has been for milder trends late this weekend over the eastern U.S., colder trends with next week’s impressive frigid blast that sweeps across much of the country, followed by warming Nov. 3-7 in an increasingly bearish setup” advertised in the latest American and European model runs, the forecaster said. “We continue to view the pattern as plenty could enough through Nov. 2-3 but then not cold enough after without notably colder trends.
In its updated forecast for the Oct. 29-Nov. 2 period, Maxar’s Weather Desk said it expected a cold air mass to descend through the Rockies and into the Midcontinent.
“Much to strong below normal temperatures are across these areas, and the forecast trends additionally colder today in association,” Maxar said. “Warm changes, however, are along the East Coast, focused in the early half ahead and along a cold front. There remains timing uncertainty with the frontal passage, and the sharp temperature gradient surrounding the front has overall confidence remaining low in the day to day details.”
Further out in the Nov. 3-7 period, Maxar said its updated forecast Thursday underwent a mix of changes.
High pressure is expected to result in a “colder start to the period in the East, while warmer adjustments are in the Midwest and East during the mid and late period,” the forecaster said.
The natural gas market continues to face “conflicting signals,” which could help explain the divergence in Wednesday’s trading between the front month and contracts further along the strip, according to analysts at EBW Analytics Group.
“The approaching end of the injection season, ramp-up in space heating demand and accompanying price increase at Henry Hub are pushing the November contract back toward last week’s levels,” the EBW analysts said. But winter-month contracts have been constrained by “continued increases in production” and a potentially “massive gain” in the year/year storage surplus in the weeks ahead.
December crude oil futures were trading around $55.81/bbl shortly after 8:40 a.m. ET, off 16 cents, while November RBOB gasoline was trading fractionally lower at around $1.6443/gal.