Natural gas futures were nearly unchanged in early trading Thursday as the market awaited more clues on the supply/demand balance, expected from the upcoming release of U.S. government inventory data. The September Nymex contract was up 0.1 cents to $2.427/MMBtu at around 8:45 a.m. ET.
For today’s Energy Information Administration (EIA) report, scheduled for 10:30 a.m. ET, analysts have been predicting a build in the 40s Bcf range.
A Bloomberg survey of eight analysts showed injection estimates ranging from 36 Bcf to 48 Bcf, with a median build of 43 Bcf. A Reuters poll had a wider range from 33-53 Bcf with the same median build expectation of 43 Bcf. NGI’s storage model predicted a 46 Bcf injection for this week’s report, which covers the week ending Aug. 14.
Last year, EIA recorded a 56 Bcf build for the similar week, while the five-year average is a 44 Bcf injection.
“It was warmer than normal over most of the U.S. besides the cooler Northwest” during this week’s EIA report period, forecaster NatGasWeather said. “Our algorithm predicts a build of 41-42 Bcf, but it’s difficult to account for how much fuel switching occurred after a more than 50-cent spike” in natural gas prices.
In terms of the overnight weather data, the European model, which has been hotter than the rest of the data, trended cooler for the Aug. 29-Sept. 3 period, according to NatGasWeather.
“The European model has been verifying consistently too hot over the past month, which is why we look at the cooler” Global Forecast System “as being more accurate for next week,” the forecaster said. “The end of August into the start of September favors comfortable highs of 70s and 80s across the northern third of the U.S., while remaining very warm to hot over” of the southern portions of the country.
Besides the EIA storage report, NatGasWeather said it will also be looking to see if day/day changes in liquefied natural gas (LNG) feed gas demand or shifts in European prices influence domestic natural gas prices.
Thursday marks the deadline for cancellations from Cheniere Energy Inc. export facilities for October, which could mean “whisper numbers emerging around export demand,” according to analysts at Tudor, Pickering, Holt & Co. (TPH).
“We’re currently modeling 7.5 Bcf/d of LNG feed gas demand versus capacity of around 10.5 Bcf/d, which we see equating to 15-20 cancelled cargoes from all U.S. terminals,” the TPH analysts said. “Notionally, we see this being about 1.5 Bcf/d more than the global market can absorb, but we expect several cargoes will take advantage of a floating storage” arbitrage “that is wide open.”
Forward prices in Asia and Europe support one or two months of floating storage, opening up the possibility for sales in November and December as seasonal demand and prices start to rise, the TPH team said.
September crude oil futures were off 35 cents to $42.58/bbl at around 8:45 a.m. ET, while September RBOB gasoline was down about 1.5 cents to $1.2759/gal.
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