Warm adjustments to the forecast and lingering questions surrounding bearish government inventory data pressured natural gas futures lower early Friday. The April Nymex contract was down 1.8 cents to $2.728/MMBtu at around 8:45 a.m. ET.
The latest forecasts early Friday showed some warmer changes focused on next week, when national gas-weighted degree days are on track to briefly approach “record warm levels,” according to Bespoke Weather Services.
“This level of warmth still appears to be more an aberration than the rule, as we have seen some variability this week and expect to again after next week,” Bespoke said. “Given a lack of high latitude ridging/blocking, it is difficult to envision a strongly anomalous colder outbreak, but we get enough cooler air mixing in to prevent the month from being biased much to the warmer side, outside of what we see next week.”
The overnight warmer changes to the forecast shouldn’t “move the needle much” in terms of prices, “and fundamentals data is stable this morning,” leaving the market to continue “wrestling with yesterday’s report” from the Energy Information Administration (EIA), according to Bespoke.
“There remains some confusion in play in the wake of that wild EIA report yesterday as folks try to determine if such a huge bearish miss means something moving forward or was a random one-off,” the firm said.
The EIA on Thursday reported a 98 Bcf withdrawal from U.S. gas stocks for the week ended Feb. 26. The print came in far below estimates, which had settled on a draw well into the triple digits.
Lower 48 stocks ended the period at 1,845 Bcf, 277 Bcf below year-ago levels and 178 Bcf below the five-year average, according to EIA.
“Most data sets have a few outliers, and it appears the EIA delivered one yesterday,” analysts at Tudor, Pickering, Holt & Co. (TPH) said in a note to clients Friday. “…Some noise was expected given the storms in the U.S. and the knock-on impacts to supply, exports, and power generation, and this week’s oil storage delivered a similarly anomalous result.”
The TPH analysts said this week’s EIA print appears to indicate supply recovering more quickly than demand following the weather-related impacts observed last month, with power generation “being the slowest to return to prior levels.”
This week’s print also serves as “a good reminder that storage data is better looked at over a multi-week period,” the TPH analysts added. “Adjusting for the underwhelming print, our end-of-season storage estimate now sits at 1.64 Tcf, or 9% below the five-year average.”
April crude oil futures were up $1.53 to $65.36/bbl at around 8:45 a.m. ET, while April RBOB gasoline was up about 3.7 cents to $2.0353/gal.
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