October Nymex natural gas futures gave back most of their prior-day gains after shuffling on either side of the settlement through early afternoon trade on Wednesday.
Natural Gas was “all over the place,” trading to a two-week high of $2.270 earlier in the session and taking out the 50-day moving average and the 200-day moving average for the first time since early July, Mizuho Securities USA LLC Energy Futures Director Robert Yawger said. The contract later caved under mild weather forecasts for much of the country, he said.
Here’s the latest:
- Prompt month contract trading down 5.5 cents to $2.148/MMBtu as of 2:55 p.m. ET
- NGI’s Spot Gas National Avg. gains 20.5 cents to $1.710, according to MidDayPrice Alert
“Price action is still neutral,” Pinebrook Energy Advisors’ Andy Huenefeld, managing partner, told NGI. Futures were bouncing around, inside a range marked by resistance at $2.30 and support at $1.90. “The highs are getting closer to the zone of resistance,” Huenefeld said. However, he noted gains were “more noise than anything.”
Demand-side fundamentals offered some modest support – albeit psychological, Huenefeld said.
On Tuesday, the U.S. Department of Energy (DOE) 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. It was the first such permit since the Biden administration paused approvals in January. The approval covered re-exporting U.S.-sourced natural gas as liquefied natural gas from Mexico, not projects that need direct non-FTA export authorization.
“This facility is already up and running with very small volumes of less than a half Bcf/d,” Huenefeld said. Still, the approval might suggest a change in the DOE’s stance.
- U.S. LNG export terminals scheduled to receive 12.9 Bcf/d of feed gas on Wednesday
- Wood Mackenzie estimates power sector demand Wednesday at 43.9 Bcf/d, down from a 45.7 Bcf/d seven-day average.
Meanwhile, Huenefeld noted that weather demand was “down big time.”
The first third of September was running cooler than the 30-year average, CLWS meteorologist Corey Lefkof said on the online energy platform Enelyst. “We are in early meteorological fall, but alas, there is some late summer cooling for the Plains and Midwest,” he said.
He also noted “quite the lull” in the tropics with no named systems in the last three weeks. “We do have a system from the Yucatan/Southern Gulf, but trends are weaker and less impressive,” he said.
Huenefeld said, “A little pop” in demand last week from the late-August heat could result in a “not especially small storage injection and nothing close to a withdrawal.”
- Analysts anticipating bullish print from U.S. Energy Information Administration (EIA) on Thursday
- Wood Mackenzie estimating Lower 48 natural gas production at 100.6 Bcf/d on Wednesday, down about 1 Bcf from prior seven-day average
For Thursday’s EIA print covering the week ended Aug. 30, NGI estimated a 20 Bcf injection. A Reuters survey found estimates ranged from injections of 20 Bcf to 33 Bcf, with a median increase of 28 Bcf.
If analysts’ models are accurate, the total natural gas supply would climb from 3,334 Bcf after the 35 Bcf build for the week ended Aug. 23. Still, the 12% storage overhang would shrink.
Otherwise, the “most critical near-term story” may be the recent decline in daily natural gas production, said EBW Analytics Group senior analyst Eli Rubin.
Lower production was “letting the Nymex front-month contract probe higher,” Rubin said. However, he noted that weak weather-driven demand for gas may impede progress in narrowing storage surpluses – suggesting range-bound trading may be the most likely near-term outcome.
- Cash prices at NGI’s Henry Hub averaging $2.055, up 7.0 cents
- Spot gas prices mostly up across West; Southern Border, PG&E up 9.0 cents to $1.810, Cheyenne Hub adds 10.0 cents to $1.700
According to the National Weather Service (NWS), excessive heat is forecast to impact the Southwest through much of California and into coastal Oregon and Washington through the weekend.
Forecast highs were expected to range Wednesday in the mid-110s in the Desert Southwest and in the low 100s for southern and central California. NWS said portions of the Pacific Northwest could see temperatures in the 100s. Even higher temperatures were forecast across the West on Thursday.
