Natural gas futures were drifting between modest gains and losses through Friday afternoon trade as weaker weather-related demand butted-up against vestiges of support from Thursday’s extremely bullish storage print.
Here’s the latest:
- October Nymex futures up 2.2 cents as of 2:35 p.m. ET
- Power generation demand sinks 5.9% day/day to 41.1 Bcf/d, according to Bloomberg
Price Futures Group senior analyst Phil Flynn noted natural gas futures’ “great performance” after the bullish U.S. Energy Information Administration (EIA) storage report. The EIA outlined a 13 Bcf injection that trimmed the five-year-average storage overhang to about 11%.
Market bulls, however, were struggling to hold onto the sizable gains on Friday. Flynn told NGI that the pullback was likely a “risk off” because of rising demand-side concerns. He noted that manufacturing jobs in the United States took a “big hit” in a wider, disappointing jobs report. “Manufacturing demand could tighten here and overseas,” he said. “Demand expectations are down.”
A cooldown expected to lower power sector demand as utility customers switched off air conditioners and opened windows contributed to the lower demand outlook.
The National Weather Service (NWS) 30-day outlook showed chances of cooler weather conditions in portions of the West and across most of the East through September. Above-average temperatures were expected to stretch from the remainder of the West across the Central and South.
NatGasWeather said, however, that much of the weather data favors a very warm to hot ridge building over vast stretches of the country in the second half of the month. That could result in highs in the mid-80s to 100s over the southern half of the country. Conditions could be “perfect,” however, in the North, with highs in the 70s-80s. Lows in the 40s across the Midwest and Northeast could drive some early-season heating demand.
- Liquefied natural gas deliveries, down 3.6 % on the day, remain above 13.0 Bcf, according to Bloomberg
- Lower 48 natural gas production slides to 100.9 Bcf/d Friday, below the 101.8 Bcf/d seven-day average estimate, Bloomberg data show
Flynn also noted concerns related to the longer-term outlook for LNG, even after the U.S. Department of Energy issued a permit to New Fortress Energy Inc. to export up to 1.4 million metric tons/year of LNG to non-free trade agreement (FTA) countries from its recently commissioned Fast LNG facility in Mexico. Flynn said that the Biden Administration’s pause on approvals has not changed.
Contrarily, feed gas flows to domestic LNG facilities were climbing ahead of the weekend. NGI’s U.S. LNG Export Flow Tracker showed flows bumped to 13.53 Bcf Friday from 13.41 Bcf/d earlier.
Strong LNG demand and continued producer restraint were working to tighten the supply/demand balance.
- Cash prices at NGI’s Henry Hub averaging $2.095, up 6.0 cents, according to MidDayPrice Alert
- Permian spot prices mixed as Matterhorn Express Pipeline begins to flow; Waha slips 2.5 cents to a still positive 10.0 cents
- Spot gas prices vary in the Southeast; Transco Zone 4 up 12.5 cents to $2.300, Transco Zone 5 down 33.5 cents to $1.855
Permian Resources Corp said the Matterhorn pipeline started initial flows from the Permian Basin, adding 2.5 Bcf/d of natural gas takeaway capacity. The 42-inch diameter, 490-mile pipeline is designed to move Permian supply to the Katy hub near Houston and help clear bottlenecks keeping associated gas trapped in West Texas. Waha prices have been below zero since the spring.
Meanwhile, Tennessee Gas Pipeline Co. LLC posted an operational flow order for Zones 2-6, effective Saturday and until further notice. The action was prompted by ongoing scheduled maintenance and demand expected to ease amid forecasted milder weather.
NWS forecast for the Southeast shows highs from the upper 70s to low 80s through next week.
