December natural gas is expected to open 4 cents lower Friday morning at $3.03 as traders factor in warm, breezy conditions over the weekend and a GWHDD count in the 11-15 day period well below normal. Overnight oil markets retreated.
Natgas bulls just got a boost to their case as data shows declining production year-on-year. "With October nearing its close, Lower 48 production for the month is set to come in about 2.15 Bcf/d below last October," said industry consultant Genscape in a report. "Spring Rock's Daily Pipe Production estimate shows today's estimate just over 71 Bcf/d, just a tick over the month-to-date estimate at 70.91 Bcf/d. October 2015 volumes averaged 73.0 Bcf/d.
"Every macro production region showed declines except the East (up 1.28 Bcf/d YOY) and New Mexico Permian (+0.03 Bcf/d YOY). The largest declines are in Texas (down -1.29 Bcf/d YOY), Midcon (-1.01 Bcf/d YOY), and Rockies (-0.53 Bcf/d YOY)," Genscape said.
Gas buyers having to make purchases for electric generation across the MISO footprint over the weekend should have plenty of renewables to work with. "Fair, breezy and warm weather is expected across much of the power pool during the next two days ahead of a frontal system along the Canadian border," said WSI Corp. in a Friday morning report to clients. "A southwest flow ahead of a cold front will lead to a surge of anomalous warmth with max temps in the upper 60s, 70s to mid-80s. The aforementioned cold front will sag southward as the weekend progresses.
"The first frontal system will lead to period of strong wind generation [Friday] into tonight. Wind gen will decrease and become light by midday Sunday. The second frontal system will lead to another surge of strong wind gen during Sunday night through Monday. Output is forecast to peak 8-10+ GW with each spike of output."
In overnight Globex trading December crude oil fell 35 cents to $49.37/bbl and December RBOB gasoline dropped a penny to $1.4732/gal.