With mixed trends in the overnight weather data and the market awaiting the latest round of government inventory data, natural gas futures were hovering close to even in early trading Thursday. The February Nymex contract was up 0.4 cents to $2.731/MMBtu at around 8:45 a.m. ET.
Traders and analysts are predicting another triple-digit withdrawal from U.S. natural gas stocks in the latest Energy Information Administration (EIA) storage report, scheduled for 10:30 a.m. ET. A Bloomberg survey found estimates ranging from withdrawals of 120 Bcf to 141 Bcf, with a median of a 129 Bcf decrease.
NGI modeled 130 Bcf withdrawal for this week’s report, which covers the week ending Jan. 8.
A withdrawal near estimates would shrink the year/year storage surplus but fall shy of five-year norms, EIA data show. EIA recorded a 91 Bcf withdrawal for the comparable year-ago period, while the five-year average withdrawal is 161 Bcf, according to the agency.
Energy Aspects, which issued a preliminary estimate for a 128 Bcf withdrawal, estimated a 10% week/week decline in heating demand for the report period.
However, “this will be partially offset by a return of industrial demand (up 0.8 Bcf/d week/week) and exports to Mexico (up 0.3 Bcf/d week/week) after the holiday season,” the firm said. “Gas power burn is also set to grow by 0.6 Bcf/d week/week.”
Meanwhile, looking at the latest weather picture, NatGasWeather observed mixed trends in the overnight data, with heating demand gains in the Global Forecast System countered by demand losses in the European data.
“Overall, both maintained a rather bearish pattern through Jan. 21 with only modest cold shots into the U.S.,” the firm said. “However, both were rather chilly across the northern U.S. Jan. 23-28, but this time the GFS more so than the European.”
NatGasWeather said it views the GFS forecast as “too cold” between days eight and 15 of the outlook period, pointing to “big milder trends it conceded to for this week and next week” as evidence that temperature expectations for this time frame could trend milder.
“The overnight European does show that if frigid air over Canada and the western U.S. Jan. 23-28 were to shift just slightly further westward, the pattern would trend rapidly warmer over the important Midwest and eastern U.S.,” NatGasWeather said. “As such, it’s critical cold comes through” for this period, “but to our view, the risk is there could be warmer trends in time.”
From a technical standpoint, ICAP Technical Analysis analyst Brian LaRose noted following Wednesday’s trading that the February contract produced another “big shooting star on the daily candlestick chart” after settling well off the highs for the session.
“Bulls need a rally Thursday to negate the dual shooting star tops,” LaRose said. “Bears need to take out both $2.709 and $2.643 to have a shot at revisiting the $2.238 low.”
February crude oil futures were off 46 cents to $52.45/bbl at around 8:45 a.m. ET, while February RBOB gasoline was down about 2.4 cents to $1.5253/gal.
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