Natural gas futures eased lower early Thursday as traders awaited the latest government storage report, a potentially pivotal data point that has proven difficult to predict in recent weeks. The June Nymex contract was down 0.2 cents to $2.936/MMBtu at around 8:50 a.m. ET.
The Energy Information Administration’s (EIA) latest weekly storage report, scheduled for 10:30 a.m. ET, is expected to show a net injection in the mid to low 60s Bcf.
Estimates generated by a Reuters poll spanned increases of 49 Bcf to 76 Bcf, with a median of 65 Bcf. The Wall Street Journal’s weekly survey showed estimates ranging from increases of 52 Bcf to 70 Bcf, with an average of 62 Bcf. The median of 13 estimates submitted to Bloomberg as of early Thursday showed a median 65 Bcf build, with predictions ranging from 49 Bcf to 76 Bcf.
NGI’s model predicted a 76 Bcf injection for this week’s report, which covers the week ended April 30. Last year, EIA recorded a 103 Bcf injection for the similar week, and the five-year average is an 81 Bcf build.
“It was warmer than normal over most of the U.S. besides the cooler Midwest and slightly cool Southwest,” NatGasWeather said of temperatures during the EIA report period. “Our algorithm expects near 70 Bcf, although with lower confidence since EIA storage reports have printed numerous surprises both to the bullish and bearish sides over the past few months.”
The weekly EIA reports often influence the direction of natural gas futures prices, but this week’s print could prove “more important than most,” according to analysts at EBW Analytics Group.
This is because the report “will provide a basis for calibrating weekly injections during the first three weeks of May,” the EBW analysts said. “Analyst predictions cover a much wider range than usual. Most major surveys are huddled at 61-62 Bcf. But a number of other projections (including ours) are in the upper 60 Bcf range or even low 70 Bcf range. Still others are in the mid to low 50s.
“A significant deviation from expected levels could add or subtract as much as 20-30 Bcf to projected injections” for the next three storage weeks, “potentially moving gas prices by seven cents or more,” the analysts added.
As for overnight trends in the weather outlook, NatGasWeather said the American and European models were little changed.
“Essentially colder trends have held through the middle of next week as a barrage of weather systems” deliver “stronger than normal late season demand, focused over the Midwest/Plains/Great Lakes and Northeast,” the firm said.
The latest weather data also “maintained a light national demand pattern for May 13-20” as “warm to very warm” temperatures over the southern United States will be countered by fading heating degree days over northern parts of the country, NatGasWeather said.
June crude oil futures were down 25 cents to $65.38/bbl at around 8:50 a.m. ET, while June RBOB gasoline was off around 1.0 cents to $2.1403/gal.
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