Some cooler forecast trends late in the month coincided with an early-week bounce for natural gas futures Monday, though with weather sentiment far from bullish, market observers were looking beyond temperature trends to explain the move.

In the spot market, a cold start to the week saw mostly stable spot prices for much of the Lower 48, while pipeline constraints coincided with steep declines in West Texas; the NGI Spot Gas National Avg. fell 9.0 cents to $2.625/MMBtu.

The April Nymex futures contract rallied 5.5 cents to settle at $2.850 Monday, near the session’s high of $2.857 and well off of the low set early in the morning at $2.773. Monday’s rally erased most of the losses from a 6.0-cent sell-off on Friday. Further along the strip, May added 5.4 cents to settle at $2.856, while June settled at $2.905, up 5.3 cents.

Rather than seeing the forecast as a catalyst, NatGasWeather suggested Monday’s gains could be an indication the market is comfortable within its recent range.

“Prices have gravitated toward $2.86 many times over the past few weeks and are back within 1 cent of it now,” the forecaster said in a note to clients Monday. The gains Monday occurred prior to Global Forecast System (GFS) data that trended slightly colder by seeing “better potential for weather systems over the western and central U.S. to also reach the East” during the March 27-April 1 period.

“The European model had been the cooler model the past several days in projecting this, which if it were to hold true would provide closer to neutral weather sentiment instead of solidly bearish,” NatGasWeather said. While Monday’s GFS data added some demand to the outlook, it’s “still difficult to know if the natural gas markets really have weather concerns,” or if Monday’s rally “is because they are simply content keeping prices in the $2.80-2.89 range for a bit longer waiting on other market clues.”

Powerhouse President Elaine Levin looked to the technicals to help explain Monday’s price move, noting that the market is still stuck in a the same range from $2.75 to $2.90 that it’s traded in since the start of the month.

“I think everybody expected this thing to come in and follow through on the sell-off from Friday,” Levin told NGI.

After probing below Friday’s low, however, the market didn’t follow through, indicating some “technical bouncing” at play, she said. With Monday’s rally, “we remain in the range that we spent most of last week.” Looking ahead, $2.90 “remains the top of the trading range, and unless we get through that, I just expect us to remain in the range.”

Chilly Temps, Mixed Price Moves

Physical markets appeared to be settling into a shoulder season slump Monday, posting a modest response to chilly conditions to start the week for parts of the Lower 48. With generally small day/day adjustments, prices traded well to the bearish side of $3 for most of the country.

“Cool conditions will cover much of the U.S. to open the week, with lows of teens to 30s over the northern, central and eastern U.S., including 30s and 40s across much of the southern U.S.,” NatGasWeather said in its one- to seven-day outlook. “Overall, a messy pattern this week with a mix of mild breaks and cool weather systems.

“The southern U.S. will be mild to warm with highs of 60s to lower 80s, while mild to cool across the northern two thirds of the country with highs of 30s to 50s.”

With the six- to 10-day outlook Monday showing most of the country experiencing normal and above-normal temperatures, natural gas demand is entering a “seasonal retreat,” according to Genscape Inc. senior natural gas analyst Rick Margolin.

“With the swath of abnormal cold departing, our daily macro supply and demand forecast is showing the seasonal fade underway,” Margolin said.

Genscape’s forecast on Monday was “calling for total demand over the next seven days to average 81.8 Bcf/d. Demand in our forecast tops out Tuesday at 88 Bcf/d, then enters a steady, seasonally driven retreat from there. Friday is the last plus-80 Bcf/d day through mid-April,” assuming normal weather beyond the 14-day outlook period, he said.

Prices were steady throughout the Midwest and Midcontinent Monday. Michigan Consolidated averaged $2.735, up a penny, while Southern Star finished even at $2.520.

Southern Star has scheduled a service outage this week to conduct pipeline tie-ins that should limit capacity at its Blackwell compressor in Kay County, OK. The work, which was expected to begin Tuesday and wrap up Wednesday (March 19-20), will reduce operational capacity at Blackwell to 408 MMcf/d, Genscape analyst Dominic Eggerman said.

“During this time, there is an upside for warmer weather in the region, which will lessen residential demand for gas,” Eggerman said. “Flows through the compressor station over the last 30 days have averaged 608 MMcf/d, therefore this restriction will limit 200 MMcf/d of flows to Southern Star’s Market Zone in Kansas and Missouri.”

In the Northeast, price action was mixed. Algonquin Citygate averaged $3.120, down 12.0 cents, while Iroquois, Waddington tacked on 1.0 cent to $2.900.

Maintenance planned this week at Iroquois Gas Transmission’s Brookfield compressor in Fairfield County, CT, is not expected to be impactful, according to Genscape analyst Josh Garcia.

“Cutting significant capacity through this compressor would limit the amount of gas that Iroquois would be able to receive from Algonquin Gas Transmission at the Brookfield interconnect, bringing downside” to Algonquin Citygate prices, the analyst said.

Iroquois scheduled the first phase of the maintenance to run Tuesday and Wednesday, with the second phase for next week. The operator estimated the work would last around 12 hours each day.

“Iroquois did not specify how much capacity will be affected for this upcoming event, but this same event was scheduled for similar dates in 2017 and 2018,” Garcia said. “For both events, operational capacity at the Brookfield interconnect was reduced from 400 MMcf/d to 302 MMcf/d. However, more gas was scheduled through Brookfield than the reported operational capacity, likely due to the short daily maintenance window. As such, this event is not likely to be impactful.”

After a brief reprieve last week, constraints on Permian Basin producers appeared to be wreaking havoc once again on West Texas spot prices Monday, resulting in some crushing negative basis differentials. El Paso Permian fell 93.0 cents to average 59.0 cents on the day, while Waha tumbled $1.180 to average just 30.5 cents.

El Paso Natural Gas (EPNG) declared a force majeure Monday from equipment failures at two compressor stations in southern New Mexico, resulting in a 200,000 Dth/d cut to operational capacity through the pipeline’s L2000 constraint. In a notice to shippers, EPNG said the Lordsburg and Florida compressor stations each had units unavailable, meaning the 584,700 Dth/d capacity through L2000 would have to be reduced to 384,700 Dth/d until further notice.

Coinciding with analyst reports of a dip in production from the Permian, Waha basis last week improved to an average 52 cent discount to Henry in last Thursday’s trading, compared to a prior 30-day average spot basis of minus $1.39. But after declines the past two sessions, Waha finished Monday averaging a $2.555 discount to the Hub.

Elsewhere in the Lone Star State, a few East Texas locations posted healthy gains Monday. Houston Ship Channel added 10.0 cents to $2.865.

A massive fire that broke out Sunday at the Intercontinental Terminals Co. LLC (ITC) petrochemical complex in La Porte, TX, southeast of Houston, could take two days to burn out, company officials said Monday. The fire impacted seven storage tanks handling a variety of chemicals, petroleum, heavy fuel and refined products. The first tank that caught fire contains naphtha, and first responders were working Monday to control the fire to prevent the blaze from spreading. Pumping operations were also ongoing to reduce the amount of combustible material in the tank, although the risk of explosion was said to be minimal.

There were no injuries in the blast, and the adjacent city of Deer Park lifted a shelter in place Monday morning.