Natural gas futures swung between gains and losses before taking a decidedly higher turn in early afternoon trade Tuesday. Market participants attempted to gauge the impact of weather, LNG and a downward shift in Lower 48 gas production. Spot prices advanced coming off of the Labor Day weekend.
Here’s the latest:
- October Nymex gas contract up 6.6 cents to $2.193/MMBtu as of 2:25 p.m. ET
- NGI’s Spot Gas National Avg. gains 29.5 cents to $1.505, according to MidDay Price Alert
Natural gas bulls were working to wrestle the market from the bears who “have sold every rally the past two to three months,” aided by inventory surpluses not declining as fast as expected, NatGasWeather said.
Natural gas inventories climbed 35 Bcf to 3,334 Bcf in the week ended Aug. 23, according to the latest U.S. Energy Information Administration (EIA) print. The build was below historical averages and trimmed the five-year average surplus to 12.1%.
Early injection estimates submitted to Reuters for the week ending Aug. 30 averaged 34 Bcf and pointed to another bullish EIA print. The prior five-year average increase was 51 Bcf.
Wood Mackenzie estimated gas production slipped to 101.1 Bcf/d Tuesday, off from the recent seven-day average of 102.0 Bcf/d. The firm noted a drop in producer nominations heading into the first of September. “This is not out of the ordinary, and we will watch for potential revisions in the coming days,” the analysts said.
The storage expectations and lower production implied a tighter supply/demand balance. Meanwhile, an liquefied natural gas demand boost countered the outlook for declining weather-related load to start the truncated workweek.
U.S. LNG demand improved as Freeport LNG resumed normal flows after an incident that forced the facility to shut early last week. Feed gas deliveries to U.S. LNG facilities were estimated at 12.6 Bcf/d Tuesday, a few ticks above the 12.4 Bcf/d seven-day average, Wood Mackenzie data showed.
- Weather outlook calls for cooldown
- Tropics heat up, but pose no immediate threat
- Algonquin Citygate 40.5 cents higher at $1.915; less-than-a-penny gains at Transco Zone 6 non-NY at $1.440, and Transco Zone 6 NY at $1.485
Physical gas prices in the Northeast were higher Tuesday after the low-demand holiday weekend.
At the same time, weather-related demand was expected to slide. “Power burns have continued to drop heading into September,” Wood Mackenzie noted. “We currently expect burns to continue to moderate into the shoulder season based on the current weather forecast.”
Weather, particularly in the Northeast, was “about as good as it gets” for outdoor activity Tuesday, but “definitely a relatively low demand scenario in terms of energy,” ICE Connect Weather meteorologist Dave Margolin said on the online energy platform Enelyst. “The forecast shifted less warm or cooler over the weekend, so it does not look like the Northeast will get a last sudden strong burst of heat before we turn the corner to fall.”
He also noted that “things are looking a bit more active” in the tropics, where the National Hurricane Center was monitoring three areas of disturbed weather. “But at the moment there are no immediate threats.”
