Natural gas futures were taking a beating Monday, as Mother Nature was hitting demand with a powerful one-two punch.
Here’s the latest:
- October Nymex natural gas futures were down 12.0 cents to $2.155/MMBtu as of 3:10 p.m. ET.
- Tropical disturbance in the Gulf of Mexico expected to strengthen into Hurricane Francine
- National Weather Service (NWS) calling for dangerous heat in the West, cool in the East
The National Hurricane Center (NHC) was tracking Tropical Storm Francine as it moved near the western Gulf of Mexico on Monday. The storm could potentially strengthen into a hurricane when it reaches the northwestern Gulf Coast Wednesday, increasing the likelihood of “storm surge inundation” for parts of the upper Texas and Louisiana coastlines, NHC said.
Damaging hurricane-force winds were expected to impact southern Louisiana beginning Wednesday. Heavy rainfall and the risk of “considerable flash flooding” were possible from South Texas to southern Louisiana and Mississippi through Thursday.
Possible threats to LNG export facilities contributed to natural gas futures’ weakness on Monday because of the potential impact on gas demand.
“There are certainly some concerns about what impact the storm will have, especially on liquefied natural gas infrastructure,” Vortex Commodities LLC president Brian Lovern told NGI. “I am not expecting this storm to be that impactful, as the forecast track is far enough east into central Louisiana, such that LNG facilities would be spared from significant winds and storm surge.”
Lovern noted that some temporary shut ins were possible at the Venture Global Calcasieu Pass LLC liquefied natural gas facility in Cameron Parish, LA, “which could take a few Bcf off the market, but probably nothing that should really move the needle all that much.
“Obviously, any shift in the track of the storm could change this, but, so far, computer models have been pretty consistent with a hit more into central Louisiana,” Lovern said.
Feed gas deliveries on Monday afternoon appeared unchallenged, holding above 13.0 Bcf/d, Wood Mackenzie data showed. NGI’s U.S. LNG Export Flow Tracker showed feed gas deliveries at 13.47 Bcf/d Monday versus 13.55 Bcf/d a day earlier.
Meanwhile, power sector demand climbed to an estimated 40.2 Bcf/d Monday versus 38.4 Bcf/d a day earlier, but below the seven-day estimated 42.3 Bcf/d average, according to Wood Mackenzie. Residential/commercial demand slipped to 7.0 Bcf/d, off the estimated seven-day average of 7.6 Bcf/d.
Dangerous heat was still blanketing Southern California and parts of the Southwest as the week began, NWS said. Cooler, fall-like temperatures stretching from the Ohio Valley to the East tempered the impact of the heat and added to the downside pressure on natural gas futures. NWS expected temperatures to return to near normal in the Midwest and East by midweek.
- Production restraint continues as output slips to 101.2 Bcf/d on Monday, according to Wood Mackenzie, compared with a seven-day average estimate of 101.5 Bcf/d
- NGI models a 49 Bcf build to the Lower 48 natural gas supply for the week ending Sept. 6
Natural gas producers continued to hold back output amid the weak natural gas price environment. That has helped limit weekly natural gas inventory injections and pare down the storage overhang that has plagued the market.
The U.S. Energy Information Administration (EIA) reported an injection of 13 Bcf natural gas into storage for the week ended Aug. 30. It fell from the prior five-year average increase of 51 Bcf. The surplus relative to the five-year average fell more than a percentage point to 11%. A series of small increases over the summer brought the surfeit to the five-year average, down from 40% last spring.
Another small injection was expected when the EIA releases its next storage report on Thursday. Early injection estimates submitted to Reuters averaged 49 Bcf. That compared with a five-year average build of 67 Bcf.
- Cash prices at NGI’s Henry Hub averaging $2.030, down 6.5 cents, according to MidDayPrice Alert
- Permian spot prices tumbling; El Paso Permian slides 83.0 cents to negative 75.0 cents, Waha slips 82.0 cents to a negative 72.0 cents.
Cash prices across Texas were under pressure as temperatures were expected to sink into the lower 80s through Wednesday as the storm passed, according to the NWS. Temperatures could climb back into the lower 90s into the weekend.
