Natural gas futures traders appeared to be keeping their powder dry early Thursday as they awaited the latest weekly government storage data. The July Nymex contract was up 0.5 cents to $1.785/MMBtu at around 8:45 a.m. ET.
Estimates have the Energy Information Administration’s (EIA) latest storage report dropping back below the triple-digit injection mark. Major surveys have been pointing to a build in the mid-90s Bcf for the week ending June 5.
A Bloomberg poll of nine analysts found injection estimates ranging from 91 Bcf to 99 Bcf, with a median of 94 Bcf, on par with the five-year average. A Wall Street Journal survey produced an average of a 93 Bcf injection. NGI estimated a 96 Bcf build.
Last year, the EIA recorded a 107 Bcf increase in storage for the similar week.
“It was very warm to hot over most of the U.S., with little coverage of below normals” during this week’s EIA report period, NatGasWeather said. “Our algorithm predicts a build of 90 Bcf, toward the bullish side.”
Analysts at EBW Analytics Group estimated a 92 Bcf injection for the upcoming EIA print.
“We find ourselves wondering if a bottom may be forming,” the EBW analysts said. Liquefied natural gas (LNG) feed gas flows “remain dismal, falling below 4.0 Bcf/d again yesterday. At this point, though, the gas market may be pricing this in. Hotter weather is still expected in the back half of the 15-day window, and there seems to be little appetite to drive prices below $1.77.
“This morning’s report could be telling,” they added. If the print lands on below consensus in the mid-80s Bcf range “prices could pop when the report is issued.”
As for the overnight weather data, NatGasWeather noted little change in the outlook, with the major weather models still maintaining a pattern that is “very warm to hot” for the June 18-23 period but “not quite hot enough before or after.”
“The pattern would look more intimidating if not for the hot upper ridge that expands to cover much of the U.S. June 18-23 weakening June 24-26…It’s now this June 24-26 period that would need to look a little hotter/more ominous if solidly bullish weather sentiment is to be expected,” the forecaster said.
Looking at the supply picture, Lower 48 production has been holding steady at around 86 Bcf/d, recovering from a low of 84.9 Bcf/d recorded on May 20, according to estimates from Genscape Inc.
“Production recovered to above 86 Bcf/d as quickly as May 23 and has averaged 86.3 Bcf/d since then,” Genscape analyst Josh Garcia said, attributing the uptick to the increase in oil prices. “…Recovered production since May 23 has been centered in the Permian Texas and New Mexico (up about 1.2 Bcf/d), Oklahoma (up about 420 MMcf/d), and West Virginia and Ohio (up about 570 MMcf/d).
“Tropical Storm Cristobal is still affecting production levels, with offshore production still down about 150 MMcf/d and North Louisiana down about 470 MMcf/d. However, production has a long way to recover, as it averaged 93.1 Bcf/d from the beginning of March to April 20, the last time production levels were above 92 Bcf/d.”
July crude oil futures were off $2.80 to $36.80/bbl at around 8:50 a.m. ET, while July RBOB gasoline was down about 7.5 cents to $1.1346/gal.
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