With overnight forecast trends mixed, and with traders seemingly keeping their powder dry ahead of the release of updated government inventory data, natural gas futures were hovering close to even early Thursday.
As of around 8:50 a.m. ET, the January Nymex contract was up 4.0 cents to $6.470/MMBtu. February was up 4.9 cents to $6.269.
The Energy Information Administration (EIA) is set to reveal net changes to Lower 48 natural gas storage for the week ended Dec. 9. The agency’s report, scheduled for 10:30 a.m. ET, will show much lighter-than-average weekly withdrawal from stockpiles, surveys show.
A Reuters survey of 10 analysts produced a median 47 Bcf withdrawal estimate and a range from minus 33 Bcf to minus 54 Bcf. Nine withdrawal predictions submitted to Bloomberg spanned 36 Bcf to 60 Bcf, producing a 51 Bcf median. The Wall Street Journal’s survey ranged from withdrawals of 36 Bcf to 53 Bcf, with an average estimate for a 46 Bcf pull.
NGI modeled a 41 Bcf withdrawal for the upcoming report. EIA recorded an 83 Bcf withdrawal for the year-earlier period, while the five-year average is a withdrawal of 93 Bcf.
“It was warmer than normal over most of the U.S. besides the cold Northern Plains, Northwest and Northern Rockies,” NatGasWeather said of temperatures during the EIA report week. “We expect a draw of 52-53 Bcf.”
As for updated forecasts, trends in the overnight weather data were mixed, with the American and European models showing only marginal heating degree day changes for the 15-day projection period, according to the firm.
“While the overnight data maintained an impressive arctic shot” for next week through Dec. 26, “the pattern for Dec. 27-29 did trend warmer as frigid air moderates or retreats to Canada,” NatGasWeather said. “However, the pattern that far out is far from locked,” meaning “large changes should be expected, and with the potential for colder trends in time.”
In terms of storage, recent and upcoming weather will see inventories flip to a surplus versus the five-year average over the next two EIA reports, NatGasWeather said. As “frosty” temperatures spread over the Lower 48 between this weekend and Dec. 26, however, subsequent EIA reports will see stocks once again lag the five-year average, returning to a deficit of around 100-150 Bcf, according to the firm’s estimates.
Meanwhile, in technical terms, Wednesday’s 50.5-cent sell-off for the January contract marked “another sharp rejection from the 200-day moving average,” according to ICAP Technical Analysis.
“Problem is, Wednesday’s pull back stalled just in front of the 22- and 50-day moving averages once again,” ICAP analyst Brian LaRose told clients. “So, sitting in the same position following Monday’s fade. If the bulls can promptly intervene once again a surge to $7.604, even $8.012-8.177-8.191 is still possible. If they can not, the bears will have a chance to shift the narrative back in their favor.”
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