With the weather picture still looking bearish through the end of the month, natural gas futures were trading close to even early Tuesday following a 7.0-cent sell-off in Monday’s session. The May Nymex futures contract was unchanged at $2.590/MMBtu at around 8:30 a.m. ET.
Following warm trends in the weekend weather data, “slight cooler trends” in the overnight forecasts added back some demand to the outlook, according to NatGasWeather.
Overall, however, the overnight gains were “not nearly enough to overcome what will still be viewed as a very comfortable/bearish U.S. pattern through the end of the month, likely through mid-May,” the forecaster said. “The natural gas markets will now have to patiently wait on more intimidating heat since any chance of strong late season cold shots is essentially over.
“There will still be weather systems that bring widespread heavy showers but with only minor cooling that just won’t be widespread or cold enough to impress,” NatGasWeather said.
The current pattern appears likely set up to a string of larger-than-normal weekly storage injections for the next five to six weeks, all trending toward 80 Bcf or more, potentially over 100 Bcf by late April into mid-May, the forecaster said.
Energy Aspects issued a preliminary estimate for an 84 Bcf build from this week’s Energy Information Administration inventory report, covering the week ended April 12.
“The market’s focus, and rightfully so, has been on how loose fundamentals look,” the firm said in a recent note to clients. “However, while our balances are currently pointing to an end-October near 3.65 Tcf, balances do have a lot of moving parts. Shoulder season maintenance always tends to obscure trends,” and last week saw a “step back in production growth.”
Other recent developments potentially impacting balances include indications of a ramp up in activity at Cheniere Energy Inc.’s Sabine Pass following recent maintenance, and new maintenance this week on the Agua Dulce compressor station feeding NET Mexico that could impact exports from South Texas, Energy Aspects noted.
“Though output growth has received the lion’s share of attention concerning just how loose balances will be, we are also monitoring early season net imports from Canada, as they can counterbalance sequential production gains,” Energy Aspects said. “Month-to-date April Canadian net imports of 4.7 Bcf/d are off by 0.5 Bcf/d month/month. That decline goes a long way to cancel out the 0.8 Bcf/d month/month in Lower 48 production bounce-back from winter disruptions and organic growth we expect this month.
“We forecast a 0.3 Bcf/d year/year slowdown in net imports during the full injection season, a number which could double if maintenance and production losses run for longer than currently assumed. Should the decline in northern cross-border trade continue deeper into the injection season, balances could look tighter than the currently projected 3.65 Tcf end-October carryout.”
Meanwhile, Genscape Inc.’s latest Lower 48 production estimate as of early Tuesday showed a significant day/day drop that the firm was attributing to widespread shoulder season maintenance.
“Our estimate for today’s Lower 48 production is showing a day/day drop greater than 2.13 Bcf/d with the East, Gulf Coast and Rockies all individually showing nearly 0.5 Bcf/d day/day declines,” senior natural gas analyst Rick Margolin said. “While revisions to top-day estimates so far this shoulder season have had some days in excess of 1 Bcf/d, much of today’s drop can be attributed to maintenance across the country.
“East volumes are impacted by line work on Millennium and Tetco. Permian volumes are being affected by work on El Paso Natural Gas; Rockies Express maintenance is restricting Rockies output; Midcontinent volumes are affected by Southern Star work.”
May crude oil futures were up 37 cents to $63.77/bbl as of 8:30 a.m. ET, while May RBOB gasoline was off fractionally to $2.0105/gal.