Lacking inspiration from a forecast showing weak weather-driven demand well into the month of May, natural gas futures sold off for the third straight session Monday. In the spot market, Rockies prices strengthened on calls for chilly, stormy conditions, while more pipeline maintenance prompted West Texas discounts; the NGI Spot Gas National Avg. rose 4.0 cents to $2.145/MMBtu.
June Nymex futures fell 4.3 cents to settle at $2.524 Monday, near the low of $2.516. July settled at $2.560, off 4.0 cents, while August dropped 3.8 cents to $2.578.
Guidance trended milder over the weekend, contributing to early selling Monday, and bulls never seemed to gain a foothold on the day.
The weekend weather data slightly lowered demand expectations for the 15-day outlook period compared to Friday’s forecasts, according to Bespoke Weather Services. The forecaster said the pattern toward the middle of the month has shifted cooler, reducing cooling demand but without adding significant heating demand, as it’s “getting too late in the season for colder anomalies to contribute much” in terms of overall demand.
“We do still have some above normal demand this week thanks to more mid to upper 80s highs in the southeast quadrant of the nation before dropping off as we head into the upcoming weekend and especially into next week,” Bespoke said. Longer term, “we could see a better chance for some increase in heat again around the start of June, but low confidence this far out.”
Look for prices to remain range-bound until the market gets a better read on summer balances, analysts with Drillinginfo said Monday.
“Prices are continuing in the recent range and following a similar pattern to last year’s, but at lower levels,” Drillinginfo analysts said. “Early projections of supply growth have the market above 3.5 Tcf at the end of the injection season, based on normal summer demand. It is unlikely this market will see a dramatic move in either direction until the summer demand is better defined.
“Declines to last month’s low of around $2.43 will find support, and the highs of around $2.65-2.733 will find sellers. Watching the deferred strips and their price behavior will give a clue as to the near-term direction of this market. If the market breaks below the lows of last month, look for confirmation in the winter strip.”
Meanwhile, liquefied natural gas (LNG) feed gas deliveries got a boost over the weekend thanks to volumes ramping up at the Cameron LNG facility, according to data from Genscape Inc.
“Scheduled nominations headed to Cameron LNG continued to increase over the weekend, with deliveries to the facility hitting a maximum-to-date of 268 MMcf/d on Sunday,” Genscape analyst Allison Hurley said.
Scheduled deliveries to Cameron LNG, which have “steadily increased” since early April, were at 220 MMcf/d as of evening cycle nominations for Monday’s gas day. After the Federal Energy Regulatory Commission authorized the introduction of feed gas to the Sempra Energy-backed facility earlier this year, the first observed delivery nominations occurred April 10, according to Hurley.
“Similar to the trains at Sabine Pass LNG, each of Cameron LNG’s Trains 1-3 will eventually pull in 650-800 MMcf/d when running at full capacity,” the analyst said.
Forecasts for below-normal temperatures and even some snow accumulation in certain areas helped inspire double-digit spot price gains across the Rockies to kick off the work week.
In its short-range forecast Monday, the National Weather Service (NWS) was calling for showers and thunderstorms associated with a cold front expected to impact parts of the Midwest, Middle Mississippi Valley, Central Plains and the Rockies early this week.
“The front is expected to move faster across the Great Lakes region and Ohio Valley and reach the Northeast and Mid-Atlantic by Tuesday evening, but the front will stall farther west, creating a focus for multiple rounds of rain and thunderstorms,” the NWS said. As the front stalls “cold temperatures are forecast on the backside -- high temperatures of 10 to 20 degrees below average are expected in the Northern/Central Plains.”
The forecaster said snow could mix in with precipitation in the nighttime and early morning hours in parts of the Rockies, Great Basin and Northern High Plains, with higher elevations potentially seeing a few inches of accumulation.
Trading locations in the Rockies, which sold off on Friday, strengthened noticeably Monday. Cheyenne Hub jumped 19.5 cents to $2.060, while Kern River picked up 16.5 cents to $2.060. Midcontinent locations also appeared to get a boost from the chilly and stormy forecast. Northern Natural Demarc picked up 10.5 cents to $2.285.
Prices in West Texas mostly headed lower Monday, possibly feeling the effects of another maintenance-related constraint on the Natural Gas Pipeline Co. of America (NGPL) system impacting volumes coming from the Permian Basin. Waha dropped nearly half its value on the day, falling 10.5 cents to average just 11.0 cents.
Only days after lifting a force majeure at its Compressor Station 167 (CS 167) in Lea County, NM, Natural Gas Pipeline Co. of America (NGPL) declared another force majeure Monday at CS 167, again due to horsepower issues requiring the station to be shut in for maintenance.
According to NGPL, the constraint affected volumes traveling northbound through CS 167. The pipeline notified shippers Monday that “transports associated with storage injections will be impacted.”
A similar maintenance event last week at CS 167 limited around 70 MMcf/d of Permian volumes headed for markets in the Midwest, according to Genscape.
Over on the eastern side of the Lower 48, price moves were modest. Radiant Solutions was calling for average temperatures in the 50s to 70s over the next few days for major East Coast cities including Boston, New York, Philadelphia and Washington, DC, expected to result in modest degree day totals for those areas.
Starting Monday, the first in a series of scheduled maintenance events on the Dominion Energy Cove Point Pipeline (DECP) was expected to impact firm transportation on the system, according to Genscape’s Hurley.
Over the next several weeks, DECP has scheduled work at the Pleasant Valley compressor station to replace down actuators and install oil demisters. For this week, next week and the weeks of May 20 and June 3, DECP expects to conduct maintenance starting each Monday and lasting four days, potentially impacting firm, secondary and interruptible capacity, according to the pipeline’s notice to shippers.
“If firm transport is affected this would have the potential to impact gas flows to Cove Point LNG,” Hurley noted.