The NYMEX sold off hard in the wake of last week’s EIA report. Here at The Schork Reportwe switched our bias to bearish on the previous session, thus we are pleased. But as we analyze in today’s issue, we are not 100% sure this report is as bearish as Thursday’s price path seemed to indicate.
Unlike the weekly DOE/ API oil report, which the market consensus never gets right, the weekly EIA gas report usually falls within a reasonable tolerance of the market’s guess. It is therefore a concern when the consensus flubs this report; as it now has in three of the last four reports.
For example, per estimates off of Bloomberg, the consensus survey has forecasted a combined delivery of 540 Bcf for the last four EIA reports. The actual delivery was 561 Bcf. Therefore, upon first glance it would appear the consensus undershot the actual by 21 Bcf or just 3.7%. However, first looks can often be deceiving.
In reality, the consensus has missed the mark by 75 Bcf in absolute terms; through the first two reports the consensus underestimated the delivery by a combined 48 Bcf and then overestimated the last two deliveries by 27 Bcf. That works out to an average miss of 19 Bcf per week with a 9.5 Bcf standard deviation.
For the corresponding four weeks from a year ago, the consensus missed by a combined 44 Bcf or an average miss of 11 Bcf per week with a standard deviation of only 5.6 Bcf. Furthermore, you can make an argument that gas deliveries last year were harder to gauge given that the global economy was in an absolute freefall, yet the accuracy of the consensus surveys then was greater.