June natural gas is set to open 2 cents lower Thursday morning at $4.35 on the eve of what is expected to be the first storage build past the century mark of the new injection season. Overnight oil markets were mixed.
Analysts are expecting the first three-banger build of the newly minted injection season with more to come. "Word is, this will be the first three-digit build of the year. Yippee! Based on the short-term weather forecasts, we may see a string of such beefy builds this month. Yeah, we know what you're thinking; it's all too little, too late to save this cooling season's overall reputation, right? We're not with many of you on that point of art," said John Sodergreen, editor of Energy Metro Desk (EMD).
"We still see end-of-season tallies (late November we think this year) being well within the five-year high range. Based on conversations we've had with producers, equipment leasing companies, shippers, even one pipe manufacturer, we continue to believe that production will surprise everybody this year, once the smoke clears."
The EMD weekly survey came up with a 101 Bcf build, and others are also looking for three digits. Bentek Energy's flow model calculates a 108 Bcf increase, and Raymond James figures on 101 Bcf. IAF Advisors forecasts a 99 Bcf build, and a Reuters survey of 24 traders and analysts showed a sample mean of 99 Bcf as well. The range on the Reuters survey was 91 Bcf to 108 Bcf. Last year, 99 Bcf was injected, and the five-year pace is 82 Bcf.
Short-term traders are looking for an injection "somewhere north of 95 Bcf. I think that range is baked into the market already, but I do look for a test of $4.25. That's how the market feels," said a New York floor trader following Wednesday's close.
Near-term weather forecasts show only nominal variations from seasonal norms. WSI Corp. in its morning six- to 10-day outlook shows normal temperatures throughout the country with some above-normal occurrences on the West Coast and southern Plains. Some below-normal readings were seen in the desert Southwest.
"Today's forecast has trended cooler in the Midwest/East late in the period while generally warmer in the West. Forecast confidence is near to slightly above average, with good large scale model agreement through next week.
"Temps may not cool quite as fast in the Mid-Atlantic and Southeast later next week if the subtropical ridge holds, but the official forecast took a more aggressive stance on the next cold front set to drop down from Canada."
WSI Forecast that in the next 11 days, the high reading in New York would reach 76, somewhat above its norm of 72. Chicago was anticipated to see a high of 73, two degrees above its seasonal average.
In overnight Globex trading, June crude oil dropped 28 cents to $102.09/bbl and June RBOB gasoline added a half cent to $2.9573/gal.