Mixed forecast trends overnight left the weather outlook mostly unchanged, and natural gas futures prices followed suit, trading close to even early Tuesday. As of 8:30 a.m. ET, the May Nymex futures contract was up 0.3 cents to $2.527/MMBtu.
NatGasWeather viewed the overnight weather data as mixed, with American guidance adding a few heating degree days (HDD) and European guidance dropping a few.
“No major changes overall as the data remained a touch cooler this weekend into early next week as weak weather systems race across the Great Lakes and Northeast,” the forecaster said. “However, much of the data was warmer May 1-7, favoring very light national demand returning.”
NatGasWeather said it expects “minor changes” to the forecast outlook over the next few days as “recent weather data has been inconsistent in resolving exactly how much cool air will ultimately arrive across the northern U.S.” Regardless, there most likely won’t be enough cold air to “drive stronger than normal national demand. This should be expected to continue the streak of larger than normal storage builds through mid-May.”
Analysts have been looking ahead to a potential string of triple-digit inventory builds in the weeks ahead, which would rapidly shrink the year-on-five-year-average deficit. Last week, the Energy Information Administration (EIA) reported a well-above-average 92 Bcf injection.
That plump injection “is helping to close the storage gap, with inventories now sitting 25%, or 414 Bcf below five-year norms, compared to 30% below only a week ago,” analysts with Tudor, Pickering, Holt & Co. (TPH) said in a recent note to clients.
Weather-adjusted, and after adjusting for recent maintenance impacts on liquefied natural gas (LNG) exports, the TPH team said the 92 Bcf build indicates the market was about 3.0 Bcf/d oversupplied for the report week. That matches a 3.0 Bcf/d oversupply month-to-date, according to TPH.
Energy Aspects issued a preliminary estimate for a 91 Bcf injection for this week’s EIA report, slightly below last week’s report to account for higher LNG feed gas demand from Cheniere Energy Inc.’s Sabine Pass terminal ramping back up following maintenance.
The upcoming EIA report could serve as a “microcosm of our summer balances, as 0.6 Bcf/d week/week of production growth is pitted against rising LNG feed gas demand. Trains 1 and 2 at Sabine Pass saw a full week of flows after taking no gas for three weeks of maintenance, while Cameron Train 1 climbed to over 0.1 Bcf/d April 16-18,” Energy Aspects said.
A 1.5 Bcf/d gain in LNG feed gas for the week was partially offset by a 0.3 Bcf/d week/week drop in exports to Mexico associated with maintenance on the Agua Dulce compressor in South Texas, according to the analysts.
Looking further out, “we see a string of 100 Bcf injections possible as shoulder season kicks into high gear, likely signaling a lack of relief for battered summer Henry Hub prices,” Energy Aspects said. “This will test the ability of power generation to soak up incremental gas, especially in the Midcontinent, where gas units must compete with lower-cost” coal units supplied by the Powder River Basin.
June crude oil futures were up 11 cents to $65.66/bbl shortly before 8:30 a.m. ET, while May RBOB gasoline was down fractionally to $2.1295/gal.
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