Pressured by further cooler trends in the forecast, natural gas futures pared their recent gains early Thursday as traders looked ahead to the release of the latest government storage data, expected to show a below-average summertime build. The September Nymex contract was down 2.6 cents to $1.904/MMBtu at around 8:40 a.m. ET.
Estimates have been pointing to an injection in the 20s Bcf for the Energy Information Administration’s (EIA) 10:30 a.m. ET storage report, which covers the week ending July 24.
A Bloomberg survey showed a median prediction of 23 Bcf based on estimates ranging from 18 Bcf to 30 Bcf. A Wall Street Journal poll found a low estimate of 18 Bcf and a high of 33 Bcf, with an average of 25 Bcf. NGI predicted a build of 24 Bcf.
The forecasts compare with the 56 Bcf build for the same week a year earlier and the five-year average injection of 33 Bcf, according to EIA.
“It was hotter than normal over much of the U.S., especially the East, with only locally cooler exceptions,” forecaster NatGasWeather said of this week’s EIA report period. “Our algorithm expects 20-21 Bcf, a touch to the bullish side.”
As for the outlook for the next two weeks, NatGasWeather said the overnight data extended cooler trends, with both the Global Forecast System and European models shedding expected cooling degree days (CDD).
“Both show stronger weather systems and cool shots into the northern and east-central U.S. next week,” the forecaster said. “In fact, cooler trends for next week have now dropped national daily CDD below normal, losing more than 30 Bcf in demand since late last week. Clearly, weather trends have been increasingly bearish, yet prices have been rallying. Will today be any different?”
Traders will also be keeping a close eye on Tropical Storm Isaias, which was in the Caribbean early Thursday, about 125 miles west of Puerto Rico.
“Isaias is moving toward the northwest near 20 mph, and a west-northwestward to northwestward motion with some decrease in forward speed is expected over the next couple of days,” the National Hurricane Center said in an 8 a.m. ET advisory.
Isaias could reach southern Florida by Friday night or Saturday, the forecaster said.
NatGasWeather noted that “tropical cyclone impacts have been more bearish than bullish in recent years” with “demand destruction from showers and cooling” more than offsetting any production losses.
“But again, each storm’s different and requires close monitoring,” NatGasWeather said.
September crude oil futures were off 65 cents to $40.62/bbl at around 8:40 a.m. ET, while August RBOB gasoline was down about 1.8 cents to $1.2240/gal.
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