Natural gas futures pulled back early Thursday as traders prepared to digest the latest round of government inventory data, expected to show a sixth straight higher-than-average injection into Lower 48 stocks. The November Nymex contract was off 10.8 cents to $5.062/MMBtu at around 8:45 a.m. ET.
Surveys ahead of the latest U.S. Energy Information Administration (EIA) storage report, scheduled for 10:30 a.m. ET, showed the market anticipating a net injection of around 90 Bcf for the week ending Oct. 15.
Reuters polled 17 analysts, whose estimates ranged from builds of 80 Bcf to 97 Bcf, with a median injection of 90 Bcf. The average of 14 estimates in a Wall Street Journal poll also landed at a 90 Bcf injection.
Responses to a Bloomberg survey as of early Thursday produced a median injection of 88 Bcf, with estimates ranging from 81 Bcf to 95 Bcf. NGI’s machine learning model landed on a 95 Bcf injection.
A print in line with surveys would mark the sixth straight week that the injection rate has exceeded the prior five-year average. The five-year average for the current week’s report period is a build of 69 Bcf, while the year-earlier period saw a net injection of 49 Bcf, according to EIA.
Temperatures for the latest EIA report period were “warmer than normal over the eastern two thirds of the U.S., while cooler than normal over the West,” according to NatGasWeather. “We expect a 94-95 Bcf injection, although that’s likely a little too high based on flow data.”
EBW Analytics Group analysts early Thursday were anticipating an 87 Bcf injection for the upcoming report.
“Another bullish report on the heels of last week’s surprise…could spark a midday market move higher,” the analysts said, alluding to the lighter-than-expected 81 Bcf injection revealed in last week’s data.
As for the latest forecast guidance, NatGasWeather said the American dataset maintained demand added in Wednesday’s model runs, while its European counterpart lost demand overnight. This puts the models “at odds over how much cooling weather systems will bring to the northern U.S.,” with the European model favoring less cold.
“Either way, the pattern is bearish for much of the next 16 days,” according to the firm. “…The pattern for early November is favored to bring above normal temperatures over most of the U.S., although with the potential for cooler trends over the Great Lakes and Northeast as weather systems attempt to push across the Canadian border.”
From a technical perspective, bulls managed to keep the November contract above the 50-day moving average for a second straight session Wednesday, ICAP Technical Analysis analyst Brian LaRose observed.
“Problem is, they need to do more than just prevent natural gas from falling further,” LaRose said. “To start building a case for a bottom, the bulls will need to climb back above the 22-day moving averages. If they cannot, the door is still open for a drop to $4.666, $4.543-4.517-4.444, perhaps lower before expiry.”
December crude oil futures were off 43 cents to $82.99/bbl as of around 8:45 a.m. ET.
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