Natural gas futures hovered close to even early Thursday as the market prepared for the release of a government inventory report expected to show another weak injection of supply into underground storage.
The August Nymex contract was trading at $2.117/MMBtu as of 8:25 a.m. ET, unchanged day/day. September was down 1.0 cent to $2.148.
Predictions for the U.S. Energy Information Administration’s (EIA) 10:30 a.m. ET weekly natural gas storage report pointed to a lighter-than-average increase, as low as in the single digits, following relatively strong cooling demand.
A Reuters poll of 15 analysts produced a median injection estimate of 15 Bcf, with responses ranging from builds of 8 Bcf to 24 Bcf. Injection estimates submitted to Bloomberg showed a median 11 Bcf and ranged from 2 Bcf to 18 Bcf.
NGI modeled a 11 Bcf injection for the report, which covers net changes to Lower 48 inventories during the week ended July 19. The year-earlier increase was 23 Bcf, while the five-year average build is 31 Bcf.
“It was hotter than normal over most of the U.S. besides portions of the central U.S. and Texas,” NatGasWeather noted. However, with wind generation up 50% week/week, gauging the weekly supply-demand balance was “tricky.”
The surplus to the five-year average has narrowed since the spring, down as of July 12 from more than 600 Bcf in April to 465 Bcf, EIA data show.
Injections have totaled 950 Bcf since April 1, 166 Bcf or 15% less than the five-year average, according to EIA. “Despite the decrease in injections, working natural gas inventories in the Lower 48 states remain relatively high following the warmest winter on record,” EIA analysts wrote this week.
The previous two storage prints were market-moving surprises, and “another surprise this week (particularly if bullish) could enhance price volatility risks,” said EBW Analytics Group’s Eli Rubin, senior analyst.
Rubin observed that the expiration of August Nymex options Friday and final settlement for the futures contract on Monday were also influences on trading near term, “with recent monthly rollovers leaning bearish.”
