Natural gas futures continued to rally in early trading Thursday as the market anticipated a potentially lighter-than-average build from the latest government inventory report. The October Nymex contract was up 12.2 cents to $2.247/MMBtu at around 8:45 a.m. ET.

AM markets

Predictions ahead of this week’s Energy Information Administration (EIA) storage report, scheduled for 10:30 a.m. ET, have been pointing to a lighter injection than last week’s hefty 89 Bcf build. 

A Bloomberg survey found estimates ranging from 68 Bcf to 82 Bcf, with a median of 77 Bcf, while estimates in a Wall Street Journal poll ranged from 71 Bcf to 85 Bcf, with an average of 77 Bcf. A Reuters poll of 13 analysts showed estimates ranging from 68 Bcf to 96 Bcf, with a median of 76 Bcf. NGI projected an injection of 71 Bcf for this week’s report, which covers the period ending Sept. 18.

Last year, EIA recorded a 97 Bcf build for the period, and the five-year average is an injection of 80 Bcf.

“It was hotter than normal over the Northwest and Southeast, while cooler than normal across the central U.S., Midwest and Northeast” during this week’s EIA report period, NatGasWeather said. “Our algorithm predicts a build of 71 Bcf, to the bullish side of survey averages.”

Meanwhile, the forecaster said its estimates early Thursday showed liquefied natural gas (LNG) feed gas demand jumping 2 Bcf/d day/day, with “the remnants of Beta fizzling across the Gulf Coast and Southeast.”

The October contract is coming off a roaring 29.1-cent advance in Wednesday’s session. 

“These steep gains were not a fluke,” analysts at EBW Analytics Group said. 

They pointed to a combination of factors driving the swift price increase. These include stronger prices in the day-ahead market and a strengthening outlook for both weather-driven and LNG feed gas demand over the next week. Another factor in the rally has been expectations for LNG exports to “rise sharply in October and stay very strong throughout the winter,” the EBW team said.

As for Thursday’s trading, a lot could hinge on what transpires with EIA’s storage report.

With some analysts calling for a smaller injection, potentially in the 65-69 Bcf range, “if this bullish projection is not met, the October contract could pull back briefly,” the EBW analysts said. However, a build in the 70s Bcf “could propel gas prices even higher.”

Still, despite the recent bullishness, Mizuho Securities USA LLC analyst Robert Yawger said fundamentals in the natural gas market have not changed since last week’s EIA report, which helped instigate a steep sell-off.

U.S. gas stocks remain 535 Bcf above year-ago levels and 421 Bcf above the five-year average, the analyst noted.

“It is important to keep in mind, in my opinion, that the wild swings in natural gas are largely the result of speculator positioning,” Yawger said.

November crude oil futures were off 31 cents to $39.62/bbl at around 8:45 a.m. ET, while October RBOB gasoline was down about a penny to $1.1709/gal.