Natural gas futures were up slightly early Thursday as traders awaited updated government inventory data for further evidence — or not — of the tighter supply/demand balance implied by the week-earlier print. The September Nymex contract was up 6.2 cents to $8.616/MMBtu at around 8:55 a.m. ET.
Estimates ahead of this week’s Energy Information Administration (EIA) report, scheduled for 10:30 a.m. ET, show expectations centered around a lighter-than-average build in the upper teens to low 20s Bcf. The latest print covers net changes to inventories during the week ended July 22.
Results of Bloomberg’s survey as of Wednesday showed a median injection projection of 19 Bcf, with estimates ranging from 15 Bcf to 28 Bcf. Reuters’ poll produced injection estimates that spanned 16 Bcf to 28 Bcf. It landed at a median of 20 Bcf. A Wall Street Journal poll found an average injection expectation of 23 Bcf, with a low estimate of 16 Bcf and a high of 28 Bcf.
For the year-earlier period, EIA recorded an injection of 38 Bcf, while the five-year average injection is 32 Bcf.
EIA posted a 32 Bcf injection for the week ended July 15, well on the lighter side of estimates. The build raised working gas in storage to 2,401 Bcf. Still, stocks were 328 Bcf below the five-year average.
“Last week’s ultra-bullish storage report surprise ups the ante for this morning’s report as the market looks for confirmation or refutation of implied fundamental tightening,” EBW Analytics Group senior analyst Eli Rubin said. “Our 24 Bcf projection is on the higher end of consensus analyst estimates calling for a 19-25 Bcf injection, potentially accelerating a short-term downturn.”
Given widespread heat during the latest EIA report period, NatGasWeather said it’s looking for a 17 Bcf build.
“Today should again be volatile due to the morning EIA storage report and where expectations are it could print the smallest build of the summer,” NatGasWeather said. “If it prints under 20 Bcf, it will prove last week’s bullish miss” was correct in indicating a tighter-than-expected supply/demand balance.
As for overnight changes in the weather outlook, both the American and European models trended cooler, according to the firm.
“Most importantly, both held a much hotter than normal U.S. pattern” starting next Tuesday and continuing through Aug. 10, NatGasWeather said. “…Hot high pressure will expand to cover most of the U.S. next week with highs of 90s and 100s, including highs of 90s returning from Chicago to New York City to aid very strong national demand. Cooler exceptions next week will be confined to the Northwest or far North.
“The overnight data suggested this unseasonably hot upper ridge will hold Aug. 10-15 to keep weather sentiment bullish,” the firm added. However, it’s possible “weather systems find flaws in the hot ridge over time to reduce demand.”
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