Natural gas futures were trading close to even early Thursday as traders awaited the release of weekly government storage data that could offer a glimpse at the extent of demand impacted by the Covid-19 pandemic. The May Nymex contract was off 0.1 cents to $1.586/MMBtu at around 8:40 a.m. ET.
Estimates ahead of the latest Energy Information Administration (EIA) weekly storage inventory report, scheduled for 10:30 a.m. ET, have ranged widely from a withdrawal as small as 16 Bcf to as large as 31 Bcf. Responses to a Bloomberg survey clustered around a withdrawal of 31 Bcf, while a Wall Street Journal poll averaged a 26 Bcf pull. NGI’s model fell outside the range of other estimates, projecting a 10 Bcf draw.
Last year, the EIA recorded a 6 Bcf injection for the similar week, while the five-year average stands at a withdrawal of 19 Bcf.
“This morning’s weekly storage report is likely to significantly influence today’s trading, since it will provide the first solid indication of the impact of the virus on demand for gas,” EBW Analytics Group analysts said early Thursday. A smaller draw versus estimates “could send prices down sharply.”
Looking at the weather during this week’s EIA report period, which covers the week ended March 27, “it was very warm to hot across the southern and eastern U.S. with highs of 70s to 90, while cool over the West and Plains,” NatGasWeather said. “Our algorithm forecasts a draw of 23 Bcf,” but this is a “tricky” report to predict “due to school, business and factory closings from Covid-19.”
Genscape Inc. predicted a 24 Bcf withdrawal for Thursday’s report. That’s a seasonally adjusted composite of the firm’s supply and demand modeling, which showed a 15 Bcf withdrawal, and its storage facility model, which pointed to a 26 Bcf withdrawal.
“If realized, a 24 Bcf withdrawal would be loose to the five-year average by about 2.4 Bcf/d,” Genscape senior natural gas analyst Rick Margolin said. “Current Lower 48 inventory is estimated to stand just over 2 Tcf.” Genscape’s modeling shows “currently traded forward curves guiding end-of-summer 2020 inventories to a somewhat reasonable 3.86 Tcf.
“However, we are frequently warning that number is poised to escalate to potentially infeasibly high levels as the demand destructive elements of the Covid-19 pandemic precede and outpace the production reductive components.”
May crude oil futures were trading $1.90 higher to $22.21/bbl at around 8:40 a.m. ET, while May RBOB gasoline was up about 6.0 cents to around 60.7 cents/gal.
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