With traders weighing hotter forecast trends overnight and the potential for a momentum shift on the latest government storage data, natural gas futures were up several cents in early trading Thursday. The August Nymex contract was up 5.8 cents to $1.882/MMBtu at around 8:40 a.m. ET.
The 10:30 a.m. ET Energy Information Administration (EIA) storage report, covering the week ending July 3, could shed light on how much recent summer heat is motivating power burns.
A Bloomberg survey found injection estimates ranging from 55 Bcf to 62 Bcf, with a median of 59 Bcf. The average of a Wall Street Journal poll was 57 Bcf, with a low estimate of 51 Bcf and a high of 63 Bcf. A Reuters poll found estimates ranging from 51 Bcf to 65 Bcf and an average of 58 Bcf. NGI estimated an injection of 66 Bcf.
The forecasts compare with an 83 Bcf storage build in the same week in 2019 and a five-year average injection of 68 Bcf. EIA last Thursday reported a 65 Bcf injection for the week ended June 26.
“It was hotter than normal over much of the eastern two thirds of the U.S., while cooler than normal over most of the West” during this week’s report period, NatGasWeather said. “We expect a 53 Bcf injection, a touch to the bullish side.”
As for overnight changes to the upcoming weather outlook, the forecaster said both the Global Forecast System and the European model trended hotter, adding around 3-4 cooling degree days (CDD), respectively.
The models maintain a “solidly hot U.S. pattern” over the next 15 days, particularly for the period starting next Thursday and extending through July 23, NatGasWeather said. “The European model continues to run hotter than the GFS by more than 10 CDD, but both show widespread highs of 90s and 100s and humid conditions that will push the heat index into the dangerous 100-120 range. We continue to expect this hot U.S. pattern will last through the end of July.”
Futures pulled back in Wednesday’s session, which analysts at EBW Analytics Group attributed in part to profit taking ahead of this morning’s EIA report.
With expectations clustering around a build in the mid to upper 50s Bcf, “a bearish miss could send prices down to $1.77,” the EBW analysts said. “A bullish miss could reverse yesterday’s losses.
“Unless there is a major bullish surprise, natural gas could trade in a narrow range for the rest of this week,” they said. “While tomorrow and Saturday are likely to be red hot, temperatures are expected to moderate slightly on Sunday. The most intense heat is likely to begin next Wednesday — the start of a nine-day stretch with some of the hottest mid-July weather on record…The market’s response is likely to speak volumes about how far gas prices might rise this summer.”
August crude oil futures were off 7 cents to $40.83/bbl at around 8:40 a.m. ET, while August RBOB gasoline was down fractionally to $1.2899/gal.
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