Natural gas futures were trading close to even early Thursday as traders kept their powder dry ahead of another round of weekly government storage data that could help capture the extent of recent production cuts. The July Nymex contract was trading at $1.884/MMBtu at around 8:40 a.m. ET, off 0.2 cents.
The Energy Information Administration (EIA) is expected to report another hefty injection into U.S. gas stocks when it releases its latest weekly inventory data at 10:30 a.m. ET.
This week a Bloomberg survey of three analysts produced a range of estimates from 99 Bcf to 126 Bcf, with a median of 103 Bcf. Reuters polled 16 analysts, who had the same range of estimates but arrived at a median of 106 Bcf. NGI projected a 110 Bcf build, which is on par with last year’s 110 Bcf injection but well above the five-year average build of 93 Bcf.
Last week, the EIA said inventories grew by 101 Bcf, boosting stocks to 2,503 Bcf, which is 779 Bcf higher than year-ago levels and 407 Bcf above the five-year average.
NatGasWeather said its algorithm landed on a build around 110-111 Bcf, but predicting this week’s injection comes with “accounting challenges” from recent production declines and from the impacts of Covid-19.
Lower 48 dry gas production climbed to a recent high of 86.6 Bcf/d on Tuesday but has declined over the past couple days, according to estimates from Genscape Inc.
“Production today is averaging 85.7 Bcf/d, which is coming in about 6.6 Bcf/d less than last month’s average — the result of production shut-ins around the country,” Genscape analyst Preston Fussee-Durham said. “While production has rebounded slightly” from lows set last week at 84.9 Bcf/d, “yesterday’s and today’s values suggest a slight reversal to the downside.”
The largest declines this week have shown up in the Permian Basin and in Northeast Pennsylvania, according to Genscape’s estimates.
“That said, yesterday’s Northeast Pennsylvania production numbers were revised up by 305 MMcf/d, suggesting the majority of observed declines can likely be attributed to to decreased Permian production,” Fussee-Durham said.
As for the overnight guidance, NatGasWeather said it observed no major changes in the latest data.
“There will still be bouts of hot conditions over the U.S. but not sustained or widespread enough to intimidate,” the forecaster said. “As such, weather patterns maintain a neutral to slightly bearish bias due to only limited coverage of highs reaching the 90s besides the Southwest deserts.
“High pressure will at times become close to hot enough over the southern U.S. late next week through mid-June, but to be considered bullish will likely require a little hotter trends, which is possible and needs close watching.”
July crude oil futures were down 33 cents to $32.48/bbl at around 8:40 a.m. ET, while June RBOB gasoline was trading about 1.1 cents lower at around 98.2 cents/gal.
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