With the market turning its attention to the latest government storage data, and with forecasts coming in slightly cooler overnight, natural gas futures were down around a penny in early trading Thursday. The July Nymex contract was off 1.2 cents to $1.626/MMBtu at around 8:45 a.m. ET.
Estimates generally have the Energy Information Administration (EIA) reporting a weekly injection in the mid-80s Bcf when the latest report is issued at 10:30 a.m. ET.
A Bloomberg poll of nine analysts found injection estimates ranging from 78 Bcf to 87 Bcf, with a median of 84 Bcf. A Wall Street Journal survey produced an average of 85 Bcf, in line with results of a Reuters survey. NGI estimated an 86 Bcf build.
The relatively bullish expectations compare with a build of 111 Bcf during the same week a year earlier and the five-year average build of 87 Bcf.
According to NatGasWeather, “It was very warm to hot over much of the eastern two thirds of the U.S., while cool versus normal over the West” during this week’s EIA report period, which covers the week ending June 12. “Our algorithm predicts a build of 83 Bcf.”
As for the overnight weather data, the forecaster observed cooling degree day losses from both the Global Forecast System and European models. The outlook remained “little changed overall, as it held a not-hot-enough U.S. pattern through next week due to a stalled weather system over the East this week, followed by additional systems sweeping across the Midwest and east-central U.S. next week.”
NatGasWeather said June 28-July 2 presents the next opportunity for more impressive heat to show up in the outlook, “and it needs to come through or weather sentiment will remain bearish biased.”
Bespoke Weather Services similarly noted slightly cooler changes to the forecast over the last 24 hours but with the pattern largely unchanged overall.
“This morning’s balance data also shows little change,” with production and liquefied natural gas feed gas demand “near flat day/day, and power burns stable,” Bespoke said. “Mexican exports ticked higher again, but so did Canadian imports, with the two canceling each other out.”
Unless EIA’s latest report serves up a major bearish surprise, the firm expects prices to hold near current levels.
“The implied balance extrapolated through the end of the season doesn’t indicate that containment risks have increased compared to previous trips down to this price level, but of course the risk is still there, especially if summer disappoints,” Bespoke said. “…Anything up in the 90s Bcf would likely offer our biggest test yet of the $1.60 support level, while a build closer to 80 Bcf would be supportive.”
July crude oil futures were up 20 cents to $38.16/bbl at around 8:45 a.m. ET, while July RBOB gasoline was up fractionally to $1.2210/gal.
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