July Natural Gas Called Lower as Forecasts Maintain Long-Range Cooler Risks

     8:55 AM    

July natural gas was set to open Wednesday about 1.7 cents lower at around $2.886/MMBtu following Tuesday’s 6-cent sell-off, with forecasts overnight carrying similar themes of near-term heat and cooler risks for later in June.

From DJ news this morning:

Natural-gas prices fell on Wednesday, as Subtropical Storm Alberto made 
landfall over the weekend and weighed on cooling demand.

The storm hit Florida Monday afternoon, and lead to cooler temperatures in 
the south. Natural gas is used to heat homes and businesses in the summer, and 
high temperatures tend to boost demand.  
 
  However, weather forecasts still show warmer-than-average temperatures 
across much of the U.S. over the next 15 days, which analysts said should 
support prices.

From DJ News this afternoon regarding the weekly EIA guess survey:

The U.S. Energy Information Administration is expected to report that 
storage levels rose by 102 billion cubic feet of gas during the week ended May 
25, according to the average forecast of 12 analysts, brokers and traders 
surveyed by The Wall Street Journal. 

 The above is for the report to be released tomorrow. In addition, look out for next week's report for what could easily be the largest injection of the season since it is the one for Memorial Day week, which on average has had the largest injection of the year. Since Alberto ended up causing no or virtualy no shut-ins and some areas got the cooling effects from Alberto, it is liable to be really large.

`NG closing comments from NGI

Natural Gas Futures Slide as Triple-Digit Build Expected; Spot Prices Mixed

Larry,

This is what you said would happen with Alberto in the south.......cooling

Mike,

 I'm waiting to see what the CDD count will end up at for the current EIA week as Alberto provided the expected cooling but other areas were hot. We'll know by Sunday. Will it be a typical extra large Memorial Day week injection or will it be an atypical underwhelming injection due to high enough CDDs?

 Meanwhile, I see NG was quite strong today just ahead of today's EIA release. Warmer models/forecasts?

 And as I was typing this post, today's EIA was just released at a bullish +96 vs average guesses in the low 100s. NG responded to go even higher. If next week's report for the Memorial Day week were to end up under +100, look out above.

July Natural Gas Called Higher on Hotter Guidance for Second Week of June

     8:50 AM    

July natural gas was set to open Thursday about 4.7 cents higher at around $2.932/MMBtu, with overnight guidance trending hotter for the second of week of June, while the market was turning its attention to the 10:30 a.m. ET release of weekly government storage data. 

 The group that reports on Gulf of Mexico shutins confirmed today that Alberto related shut-ins were so tiny that they didn't even warrant a report. So, they were essentially zero.

 Today's report ended up being a bullish +96 (vs avg. guess of +102). Now we await the next report, the one for Memorial Day week, which has had the largest average injection based on the past 20 years or so. My early indications favored it would be 106+ assuming not too high CDDs and no large shutins from Alberto.

 Well, there ended up being hardly any shut-ins. However, the CDD rough tally has just come in to me and it is significantly higher than I had expected. It looks it is going to come in near or more than 20 above normal and that much above the prior week, meaning one of the warmer Mem. Day weeks in recent years. Whereas HDDs will come in well below normal and significantly lower than the prior week, high CDDs/low HDDs have usually resulted in Memorial Day week injections that are not that high...i.e., the CDDs have a stronger correlation than HDDs to total demand that week. Also, today's report coming in under +100 is significant. So, I now no longer expect 106+ in next week's EIA and actually favor under 100 for now. I'll have an even better feel for this once the weekly NOAA DD reports are released.

 Does anyone disagree with this line of thinking about next week's EIA report?