Following some overnight warming trends, and with the market continuing to mull the implications of the season’s first reported storage injection, natural gas futures were trading close to even early Friday. The May Nymex futures contract was down 0.1 cents at $2.642/MMBtu at around 8:30 a.m. ET.
Bespoke Weather Services viewed the overnight models as taking a “step in the warmer direction.”
“We still have slightly above normal demand once we wade through the next five days, which run quite warm, but with a weaker than normal cold air source available up in Canada and more storm variability in play, the upcoming blocking pattern has not been able to push the pattern any further to the cold side,” Bespoke said.
“Best chance for below normal temperatures in the upcoming pattern remains from the Midwest back to the Rockies, with some lingering upper level ridging holding rather firm in the Southeast, which limits the amount of chill that can seep into areas from the Gulf Coast up along the eastern seaboard.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 23 Bcf build -- the first of the injection season -- into storage inventories for the week ending March 29. The build compared with a year-ago 34 Bcf withdrawal and a five-year average draw of 23 Bcf. Working gas in storage stood at 1,130 Bcf, 228 Bcf below last year and 505 Bcf below the five-year average of 1,635 Bcf, EIA said.
Noting that the 23 Bcf build, which came in significantly higher than consensus, occurred despite heating degree days that were in line with seasonal norms, analysts with Tudor, Pickering, Holt & Co. (TPH) said the number implies the market was about 4 Bcf/d oversupplied after adjusting for weather.
“The storage deficit to the five-year average now sits at 505 Bcf, or minus 31%, after the gap closed 50 Bcf this week,” TPH said. “We expect this trend to continue, with early modeling pointing to a build in the 30 Bcf range next week versus norms of 5 Bcf, and current residential/commercial demand is showing a further roughly 4 Bcf/d demand erosion for the following week.”
Amid maintenance at Cheniere Energy Inc.’s Sabine Pass terminal, liquefied natural gas (LNG) export volumes remain depressed at around 3.9 Bcf/d, versus 4.8 Bcf/d a month ago.
“Given the outlook for weak weather-related demand, if LNG volumes remain depressed we could see our first triple-digit build before the end of the month, an event normally reserved for mid-May,” the TPH analysts said.
By Genscape Inc.’s calculation, the 23 Bcf build implied the market was 6.1 Bcf/d loose versus the five-year average compared to degree days and normal seasonality.
“Total power generation was down around 9 average GWh versus the previous week,” Genscape analyst Margaret Jones said. “Nuclear and renewable generation was up around 9 average GWh as wind gen was up almost 10 average GWh week/week and nuclear and hydro collectively dropped by about 1 average GWh.
“Thermal generation was down 18 average GWh, with coal down around 11 average GWh week/week. Gas was down around 7 average GWh for an estimated 1.4 Bcf/d less gas burn week/week.”
May crude oil futures were trading close to even at $62.12/bbl as of 8:30 a.m. ET Friday, while May RBOB gasoline was off about a penny at $1.9294/gal.