Natural gas futures pared their recent gains early Thursday as traders prepared to digest updated government inventory data that was expected to show a notably larger weekly injection compared to recent reports. The October Nymex contract was down 8.3 cents to $5.377/MMBtu at around 8:55 a.m. ET.

NGI Morning Natural Gas Price & Markets Coverage

That the October contract began to sell off in Wednesday’s trading after reaching a high of $5.65 signaled that “the explosive rally may be nearing a turning point,” according to analysts at EBW Analytics Group. 

The EBW analysts pointed to revisions to pipeline nominations that showed liquefied natural gas feed gas demand at the Freeport terminal remaining down by more than 1.9 Bcf/d versus levels observed prior to the arrival of Tropical Storm Nicholas along the Texas coast.

Projected cooling degree day losses and “the ongoing rollover” of the UNG (aka United States Natural Gas Fund) exchange-traded fund “from the October contract to November may have contributed to selling pressure on the front-month,” the EBW analysts added.

Meanwhile, traders early Thursday were preparing to factor in the latest weekly storage report from the U.S. Energy Information Administration (EIA), expected to show a build in the 70s Bcf based on surveys.

A Wall Street Journal survey landed an average build estimate of 74 Bcf, with a range of 59 Bcf to 80 Bcf. A Reuters poll found injection estimates spanning from 59 Bcf to 85 Bcf, with a median of 77 Bcf.  

NGI estimated a 72 Bcf increase for the report, which covers the week ended Sept. 10. The five-year average for the period is an increase of 79 Bcf. For the comparable week a year earlier, EIA recorded a build of 86 Bcf.

EIA last week said utilities injected 52 Bcf into storage for the period ended Sept. 3. The build put inventories at 2,923 Bcf, far lower than the year-earlier level of 3,515 Bcf.

“It was cooler than normal over the eastern U.S., while warmer versus normal over the western two-thirds” of the country during the EIA report period, NatGasWeather said. “We expect a build of 79 Bcf,” though potential Labor Day holiday impacts make the build “tricky” to predict.

As for the overnight data, weather models lowered cooling demand expectations on “further cooler trends for this weekend and next week,” the firm said. “This keeps the pattern near neutral/seasonal for the front five days but still quite bearish for the six- to 15-day period.”

Overnight declines in Dutch TTF (aka Title Transfer Facility) prices could help explain the sell-off for Henry Hub futures, according to NatGasWeather.

Considering “weather data had shed demand prior to yesterday and prices spiked madly,” the drop in prices early Thursday “is more likely about global prices easing in overnight trade, as well as profit taking,” the firm said.

October Nymex crude oil futures were down 36 cents to $72.25/bbl at around 8:55 a.m. ET.