With the coronavirus pandemic hammering markets everywhere amid escalating efforts to protect public health, natural gas futures were trading sharply lower in early trading Thursday. The April Nymex contract was down 9.1 cents to $1.787/MMBtu shortly after 8:30 a.m. ET.
In the wake of the Trump Administration’s announcement of a ban on travel from Europe to limit the spread of the virus, April crude oil futures also were down, off $2.01 to $30.97/bbl.
Natural gas futures began to move lower in Wednesday’s session after the front month failed to break through resistance at $1.998, analysts at EBW Analytics Group said.
“The move lower is likely to accelerate during the remainder of this week due to panic selling across all asset classes triggered by the coronavirus, and a significant bearish shift in the 11-15 day forecast,” the EBW analysts said.
Traders also will have to factor in the latest government storage data. Estimates show the Energy Information Administration (EIA) reporting a lighter-than-average weekly withdrawal from U.S. natural gas stocks when it releases its 10:30 a.m. ET report.
A Bloomberg survey Wednesday showed a median 56 Bcf pull, while a Reuters poll landed on a withdrawal of 59 Bcf. NGI’s model predicted a 51 Bcf withdrawal for the EIA report, which covers the week ended March 6. Estimates as of Wednesday ranged from minus 49 Bcf to minus 66 Bcf.
Last year, EIA recorded a 164 Bcf pull for the similar week, and the five-year average is a withdrawal of 99 Bcf.
“It was warmer than normal over almost the entire country, especially so across the Midwest,” NatGasWeather said of this week’s EIA report period. “Our algorithm expects a draw of 48-50 Bcf, to the bearish side.”
As for the overnight weather data, the forecaster noted a milder outlook from the European model for this weekend and also for the March 20-25 period, with the model reversing colder trends from runs earlier in the week.
“It’s been rather difficult to know exactly how much weather patterns have been influencing trade due to huge moves in oil and equity markets,” NatGasWeather said. “But if the natural gas markets are pricing in weather, the overnight European model was milder and could be noticed.
“Volatility is likely to continue after the results of the morning EIA report, where the markets are hoping it shows continued tightening in the supply/demand balance to offset not quite cold enough weather patterns.”
April RBOB gasoline was down around 13.5 cents to 97.56 cents/gal at around 8:45 a.m. ET.