Awaiting a catalyst to break natural gas futures out of their recent range, traders looked ahead to the latest round of government storage data early Thursday as prices pulled back slightly. The June Nymex contract was down 2.1 cents to $2.948/MMBtu at around 8:50 a.m. ET.
Prediction for this week’s Energy Information Administration (EIA) storage report, scheduled for 10:30 a.m. ET, show expectations clustered around a build in the mid-70s Bcf.
Estimates submitted to Bloomberg as of Wednesday showed a median 73 Bcf injection expected from this week’s report, which reflects inventory changes for the week ended May 7. Predictions ranged from an injection of 68 Bcf up to 92 Bcf. Reuters polled 16 analysts, whose estimates ranged from an injection of 68 Bcf to 82 Bcf, with a median build of 77 Bcf.
The average forecast of 13 analysts participating in a Wall Street Journal survey landed at 73 Bcf. Estimates ranged from increases of 68 Bcf to 79 Bcf.
NGI’s model forecast an 82 Bcf injection, which would match the five-year average build. Last year, EIA recorded a 104 Bcf injection for the similar week.
“It was warmer than normal over most of the U.S. besides a touch cooler over portions of Texas and extending across the east-central U.S.,” NatGasWeather said of temperatures during this week’s EIA report period. “We expect a build of 81 Bcf, bearish versus survey averages.”
EBW Analytics Group analysts said if the EIA report surprises versus expectations it could potentially “break the logjam” for a June contract that has been trading “within an exceedingly narrow range.”
“Our view for a 79 Bcf build sits toward the higher side of consensus estimates for an injection in the low to mid 70 Bcf range,” the EBW analysts said. “A bullish surprise and post-report position ahead of a supportive EIA report next week, however, could allow the front month to test $3.00.”
However, the front month faces “heavy technical resistance” at $3.00 or higher, space heating demand is expected to fall by the end of the weekend and the “easing of key Appalachian pipeline maintenance next week” should allow production to increase, according to the firm.
These factors all suggest “the June contract’s path of least resistance remains lower,” the EBW analysts said.
Meanwhile, there were no major changes to the weather outlook overnight, according to NatGasWeather.
“Most importantly, the overnight data held a light demand pattern for the U.S. this weekend through May 26-27,” the firm said. Both the American and European models “tease hotter conditions attempting to gain ground around May 27-29, but with more evidence needed if it’s to be expected.”
The weather data will need to show “more ominous heat” arriving late May or early June “or it could lead to disappointment in time since the natural gas markets are expecting a hotter than normal summer, and so far it’s been slow to arrive,” NatGasWeather said.
June crude oil futures were down $1.45 to $64.63/bbl at around 8:50 a.m. ET, while June RBOB gasoline was down around 4.2 cents to $2.1188/gal.
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