October natural gas is expected to open a penny lower Thursday morning at $3.05 as traders anticipate the release of government storage data showing injections well above historical averages. Overnight oil markets were mixed.
Weather forecasts continue to trend warmer. In the very near term, one to five days, the forecast high in Chicago was raised 5 degrees to 85, according to MDA Weather Services.
In the six- to 10-day period “the forecast continues to trend warmer as a deep trough over the West promotes strong ridging downstream, allowing for widespread aboves to much above normal temperatures across the eastern half. Warmth remains focused across the Midwest where widespread much aboves are anticipated with perhaps still additional peak higher risk.
“Meanwhile the West is cool upstream with much belows seen at times in the Interior West. The East remains the area of lowest confidence with Jose remaining nearby. The 0z Euro and GFS Op models show it making a close approach to coastal New England early in the period.”
Thursday’s Energy Information Administration (EIA) storage report will give traders an opportunity to further assess the amount of demand destruction prompted by Hurricane Irma. Analyzing demand destruction can be tricky and traders on Tuesday had acknowledged that much of the concern over demand destruction may have been overestimated when October futures plunged 9 cents on Friday. Power burn in the Southeast has taken a bit of a hit from the recent hurricane damage, according to PointLogic Energy.
“Over the period of Sept. 5-13, Southeast power burn has dropped 22%, or 2.06 Bcf/d,” said NGI Market Analyst Nathan Harrison. “However, it looks like some of this recent demand loss may have been offset, to some extent, by a perfectly timed resurgence in liquefied natural gas exports, which climbed 2.18 Bcf/d over the same period.”
Estimates are coming in over a wide range, but consensus seems to be forming in the mid 80-Bcf range. Last year 58 Bcf were injected and the five-year rate is for a 63 Bcf build. Ritterbusch and Associates is looking for an increase of 77 Bcf and ION Energy calculated a 90 Bcf injection. A Reuters survey of 23 traders and analysts showed an average 85 Bcf with a range of +70 Bcf to +94 Bcf.
In overnight Globex trading October crude oil rose 51 cents to $49.81/bbl and October RBOB gasoline eased fractionally to $1.5983/gal.
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