Coming off an 11.2-cent rally the previous session, natural gas futures probed a few cents higher early Tuesday on lower production estimates. But the prompt month failed to sustain momentum as traders focused on weaker near-term demand and took profits. Cash prices also trended lower at midday.
Here’s the latest:
- September Nymex gas contract trading down 3.3 cents to $2.202/MMBtu as of 2:20 p.m. ET
- Terminals call for nearly 13 Bcf of feed gas Tuesday, on par with recent levels, according to NGI’s U.S. LNG Export Flow Tracker
- Natural gas production estimates show flows falling below 100 Bcf/d
While seasonally mild conditions in the North provided a near-term offset, robust heat over sprawling sections of the South continued to drive regionally strong cooling demand. More widespread heat was expected next week.
Export demand held steady, but Cheniere Energy Inc. was slated to begin a week-long maintenance project on the Creole Trail Pipeline Tuesday. It could trim flow to a key liquefied natural gas facility in Cameron, LA. Gelber & Associates analysts said the event would impact “roughly 0.5 Bcf/d on the pipe and by extension some of the feed gas demand from the Sabine Pass LNG terminal.”
At the same time, production slipped and fell far shy of summer highs around 103 Bcf/d. Wood Mackenzie and Bloomberg data both showed flows falling below the century mark Tuesday amid maintenance and pipeline testing projects in the Permian Basin and Appalachia.
At about 99.5 Bcf/d on Tuesday, it marked “a significant decline” in production, said Wood Mackenzie analyst Emma Weng. Output was off about 2 Bcf/d from Monday.
- Analysts anticipate further narrowing of natural gas storage surplus
The conflicting fundamentals kept prices in check through midday and left bulls to look ahead to the government’s Thursday storage print.
NGI estimated the U.S. Energy Information Administration (EIA) would report a 27 Bcf storage increase for the week ended Aug. 16. Early injection estimates submitted to Reuters averaged 33 Bcf. That compares with a five-year average increase of 41 Bcf.
EIA most recently reported a rare summer withdrawal of 6 Bcf for the Aug. 9 period. That followed a pair of below average prints in the preceding weeks.
The latest result lowered U.S. storage to 3,264 Bcf. Stocks were 13% above the five-year average. However, the surplus was two percentage points lower than the prior week, and it was far from the 2024 peak of around 40% in March.
“It bears noting that August should record the smallest monthly injection since 2000 by approximately 2.0 Bcf/d in spite of the soft” mid-August weather, said EBW Analytics Group’s Eli Rubin, senior analyst.
- Houston Ship Channel up 5.5 cents to $1.895, according to NGI’s MidDay Price Alert
- NGI’s Spot Gas National Avg. down 3.5 cents to $1.595
Cash prices were mixed amid the uneven weather outlook, with losses across the Midwest and Rocky Mountain regions countering gains elsewhere.
National Weather Service (NWS) forecasts called for below average peak temperatures in the 70s and low 80s in the northern Rockies, Midwest, Northeast and parts of the Mid-Atlantic this week, offsetting more lofty highs in the 90s and 100s elsewhere. However, NWS data show, heat is projected to grow more widespread by the weekend and extend through next week. Highs could reach the 90s in the Upper Midwest.
Meanwhile, on the maintenance front, Tennessee Gas Pipeline Co. LLC said it was performing annual testing today and would continue the work Wednesday at its Station 87 near Portland, TN. Wood Mackenzie said potential cuts could “reach 630,000 MMBtu/d, as capacity will be reduced to 1,720,000 MMBtu/d for the duration of the event. The firm noted previous 30-day maximum volumes through the segment reached 2,350,000 MMBtu/d.
At midday, Tenn Zone 1 100L was down a half-cent to average $1.945 midday Tuesday.
