With a shift toward colder Lower 48 temperatures later this month offering some hope for resuscitating bullish sentiment, natural gas futures advanced ahead of the release of updated government inventory data early Thursday.
The February Nymex contract was up 20.7 cents to $3.878/MMBtu at around 8:40 a.m. ET.
In the wake of an exceptionally mild start to 2023, the Energy Information Administration’s (EIA) 10:30 a.m. ET storage report is expected to deliver an uncharacteristically light withdrawal for the week ended Jan. 6, according to surveys.
Reuters’ poll found a median withdrawal estimate of 15 Bcf for the EIA week ended Jan. 6. Predictions ran from an injection of 11 Bcf to a draw of 73 Bcf. The Wall Street Journal’s survey landed at an average draw of 13 Bcf. Estimates spanned pulls of 5 Bcf to 30 Bcf. NGI modeled a pull of 14 Bcf.
The five-year average for the period is a 157 Bcf withdrawal, EIA historical data show.
“It was much warmer than normal over most of the U.S. besides the colder West and Northern Plains,” NatGasWeather said of temperatures during the EIA report period. “We expect a draw of 5 Bcf.
“…It’s worth noting there’s a camp of analysts that forecast a rare mid-winter build, implying a big spike higher or lower is possible depending on how far it deviates from expectations.”
Looking at updated forecasts, Maxar’s Weather Desk made colder adjustments to its latest 11- to 15-day projections, covering the Jan. 22-26 time frame.
“The forecast trends colder from the West to Midwest, with the change being a result of model trends,” Maxar said. “A ridge is projected to build along the West Coast…but with models building the ridge further north and more in the east Pacific versus yesterday’s projections.
“…The forecast has below normal temperatures being in the West to start the period, with the Plains and Midwest falling below normal during the second half. Aboves are through mid-period in the East.”
Maxar’s updated six- to 10-day forecast, covering Tuesday through Jan. 21, continued to show mild conditions blanketing the eastern Lower 48.
“Below normal temperatures are steady in the Southwest, while much and strong above normal temperatures are in the Eastern Half,” the forecaster said.
NatGasWeather similarly highlighted a projected shift toward stronger demand nationally around Jan. 23-27.
“After three weeks of heavy selling, the natural gas markets are emphatically stating the onus is on colder weather maps coming through for late January and early February if natural gas prices are to endure a strong rally,” the firm said.
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January 12, 2023 at 08:55PM
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Natural Gas Futures Rally Ahead of EIA Print as Forecasts Show Late January Cold - Natural Gas Intelligence
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