In an EBW Analytics Group report sent to Rigzone by the EBW team on Friday, Eli Rubin, an energy analyst at the company, said a \u201cbearish\u201d U.S. Energy Information Administration (EIA) report \u201creset\u2026 [gas] market momentum lower\u201d.<\/p>\n
The EBW report highlighted that the October natural gas contract closed at $2.939 per million British thermal units (MMBtu) on Thursday. It pointed out that this was down 16.1 cents, or 5.2 percent, from Wednesday\u2019s close.<\/p>\n
\u201cYesterday\u2019s bearish EIA storage surprise refocused the natural gas market on rapidly rising storage levels – and risks of a storage overshoot,\u201d Rubin said in the EBW report.<\/p>\n
\u201cIntraday prices dropped to $2.925, down 24.3 cents (minus eight percent) off Tuesday\u2019s high. The key near-term question is if technical support that tested as low as $2.869 on Sunday evening can hold,\u201d he added.<\/p>\n
\u201cProduction readings remain subdued, although the conclusion to a portion of Permian maintenance may offer upside for supply – and downside risk for prices – next week,\u201d Rubin continued.<\/p>\n
The EBW analyst went on to state in the report that, \u201camid renewed risks of the storage trajectory overshooting higher, October weather may be the decisive factor\u201d.<\/p>\n
\u201cIf the trend of warming autumns holds, production rises, hurricane threats form, or LNG trips offline, a collapse in the front-month is possible into next week\u2019s expiry,\u201d he said in the report.<\/p>\n
\u201cIf signs emerge next week that strengthen DTN\u2019s outlook for a colder October, however, averting bearish risks could offer fundamental uplift – creating volatility into next week\u2019s October expiration,\u201d he added.<\/p>\n
Rubin went on to warn in the report that \u201cmultiple possible bearish risks highlight the balance of price risks remains to the downside\u201d.<\/p>\n
In its latest weekly natural gas storage report, which was released on September 18 and included data for the week ending September 12, the EIA said working gas in storage was 3,433 billion cubic feet as of Friday, according to its estimates.<\/p>\n
\u201cThis represents a net increase of 90 billion cubic feet from the previous week,\u201d the EIA said in the report.<\/p>\n
\u201cStocks were four billion cubic feet less than last year at this time and 204 billion cubic feet above the five-year average of 3,229 billion cubic feet. At 3,433 billion cubic feet, total working gas is within the five-year historical range,\u201d the EIA continued.<\/p>\n
In a report sent to Rigzone on September 18 by the EBW team, Rubin noted that the October natural gas contract rose to $3.168 per MMBtu on Wednesday morning \u201cbefore returning the entirety of gains in the afternoon\u201d.<\/p>\n
\u201cToday\u2019s EIA report, with consensus expectations for a 78-81 billion cubic foot build, may provide a catalyst to help prices break in either direction – but the market appears to be finding a short-term equilibrium between bullish and bearish risks,\u201d Rubin said in that report.<\/p>\n
\u201cOn a bullish note, the downshift in production readings, higher LNG exports \u2026 and chances for a colder weather shift may create room for the October contract to push higher,\u201d he added.<\/p>\n
\u201cHowever, storage is 188 billion cubic feet above five-year norms with surpluses growing – and a history of weak October pricing when end of season inventories exceed 3,900 billion cubic feet,\u201d Rubin went on to state in that report.<\/p>\n
EBW Analytics Group provides independent expert analysis of natural gas, electricity, and crude oil markets, the company\u2019s site states.<\/p>\n
Rubin is an expert in econometrics, statistics, microeconomics, and energy-related public policy, the site adds, noting that he is \u201cinstrumental in designing the algorithms used in our models, and in assessing the potential discrepancies between theoretical and practical market effects of models and historical results\u201d.<\/p>\n
To contact the author, email\u00a0andreas.exarheas@rigzone.com<\/a><\/p>\n
![\"RIGZONE](\"https:\/\/www.rigzone.com\/oil\/Areas\/localimg\/logo02_fullcolor.svg\"){kind=logo}
‘ +