Coming off a stretch of day/day declines going back to last week, natural gas futures recouped some of their recent losses in early trading Thursday as traders awaited the latest round of government inventory data. The November Nymex contract was up 1.8 cents to $2.545/MMBtu at around 8:45 a.m. ET.
Estimates this week have the Energy Information Administration (EIA) reporting a near-average injection into Lower 48 gas stocks when it rolls out its latest storage report at 10:30 a.m. ET.
A Bloomberg survey found estimates ranging from 75 Bcf to 86 Bcf, with a median of 78 Bcf, while a Reuters poll found estimates ranging from 74 Bcf to 92 Bcf and a median of 76 Bcf.
A Wall Street Journal survey found estimates from 73 Bcf to 92 Bcf and an average of 80 Bcf. NGI estimated an injection of 80 Bcf for the upcoming EIA report, which covers the week ending Sept. 25.
EIA recorded a 109 Bcf injection for the comparable week last year, and the five-year average is a build of 78 Bcf.
“It was hotter than normal over the West and Plains, while cooler than normal over Texas, the South and the East,” forecaster NatGasWeather said of the EIA report period. “Our algorithm predicts a build of 75 Bcf, a touch to the bullish side.”
As for the latest forecast early Thursday, NatGasWeather said trends in the major weather models over the previous 24 hours brought them into better agreement, with the American dataset dropping heating demand as its European counterpart added demand to the outlook.
“The weather data this week has been bouncing between hotter and colder trends for Oct. 8-9 based on how far a weather system over Southeast Canada pushes into the northeastern U.S., with the overnight data back a little colder,” the forecaster said. “Overall, the data still favors a bump in national demand today through Monday due to cool conditions across the Midwest and Northeast and hot temperatures over the West.
“Lighter demand is still expected next week and beyond as comfortable conditions rule most areas besides cooler bouts across the Northeast.”
Analysts at EBW Analytics Group tallied a cumulative day/day increase in total degree days based on the latest forecast data, but they noted that overall weather-driven demand is expected to drop next week. This could continue to drag down prices in the physical market and put pressure on futures.
“But this morning’s storage report could provide support,” the EBW analysts said. “Surveys predict a 78-80 Bcf build, although a smaller injection is possible. The winter-month contracts could also attract buyers, pulling up the front month.”
Potentially “key” to the fate of November prices is the timing of the return to service for the Cameron liquefied natural gas terminal, “where power seems to have been restored. Further, during the past 24 hours, dredging of Calcasieu Channel appears to have progressed significantly. If feed gas flows start to ramp up sooner than expected, the November contract could quickly recover some of its recent losses.”
November crude oil futures were down 58 cents to $39.64/bbl at around 8:45 a.m. ET, while November RBOB gasoline was off fractionally to $1.1729/gal.
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