With the market awaiting the latest round of weekly Energy Information Administration (EIA) storage data, natural gas futures were trading close to even early Friday. The February Nymex contract was up 0.5 cents to $2.127/MMBtu at around 8:30 a.m. ET.
Estimates for this week’s EIA report, which was pushed back a day due to the New Year’s holiday, have been pointing to a smaller-than-average withdrawal for the week ended Dec. 27.
A Bloomberg survey showed a median expectation for a 63 Bcf withdrawal, with predictions ranging from minus 44 Bcf to minus 76 Bcf. A Reuters survey showed a consensus 57 Bcf pull, with estimates from minus 25 Bcf to minus 70 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures settled at minus 61 Bcf Thursday, while NGI’s model predicted a withdrawal of 49 Bcf.
Last year, EIA recorded a 24 Bcf withdrawal for the similar week, and the five-year average is a withdrawal of 89 Bcf.
“It was warmer than normal over most of the country, especially so across the Midwest and east-central United States” during this week’s EIA report period, according to NatGasWeather. “Our algorithm expects minus 52 Bcf, to the bearish side.”
As for the overnight guidance, both the Global Forecast System (GFS) and European models dropped demand from the outlook, but the overall weather picture remained largely unchanged, the forecaster said.
“Essentially, a rather bearish pattern through Jan. 15, even with several weather systems tracking into the United States, just not very cold ones besides across the Rockies and Northern Plains,” NatGasWeather said. “…We expect it could take a bullish storage report miss if prices are to reclaim $2.15-2.20, although repositioning ahead of the weekend break could bring choppy trade, especially if the midday weather data were to show better potential for cold into the United States around Jan. 16-20.”
Friday’s EIA report could produce only a “transitory” reaction from the market, according to analysts at EBW Analytics Group.
“Instead, the main issue driving prices is likely to be whether warm weather in the eastern United States finally begins to fade near the end of the 15-day window,” the EBW analysts said. “There are some indications it might, but this is likely to take until Monday to clarify. If weather modeling runs this weekend remain bearish, though, significant further declines are still possible.”
Shortly after 8:30 a.m. ET, February crude oil futures were trading $2.16 higher at $63.34/bbl, while February RBOB gasoline was up about 5.6 cents to $1.7598/gal.
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