Overnight forecasts showing heat fading in the eastern half of the Lower 48 later this month had natural gas futures prices trading sharply lower early Tuesday. The August Nymex futures contract was off 7.2 cents to $2.336/MMBtu shortly after 8:30 a.m. ET.
Heading into Tuesday’s trading, the Global Forecast System (GFS) and European models both advertised further cooler trends for the period beginning Monday through July 30, showing high pressure shifting west and increasing the chance of cool shots into the northern and eastern United States, according to NatGasWeather.
“It’s still expected to be very hot across the Midwest and East later this week into early next week with highs of mid-90s for very strong national demand, potentially the strongest this summer season,” the forecaster said.
“But after July 23-24, the setup isn’t hot enough over the Midwest and East,” disappointing bulls who “were hoping sustained heat would last...the pattern the last week of July would need to trend hotter or the data will maintain a bearish bias.”
Radiant Solutions highlighted cooler changes to its latest forecast for both the six- to 10-day and 11-15 day periods.
In the six- to 10-day, “the intense heat of the nearer-term continues into the start of this period across the eastern half, but changes from previous are cooler in the mid to late period,” the forecaster said. “This change comes along model trends in pulling a cooler air mass southward into the Midcontinent. There remains larger differences between the cooler GFS and warmer Euro solutions, and while the Euro gains favorability as the higher skilled model in recent weeks, a lack of consistency has confidence remaining on the lower side of usual.”
As for 11-15 day period, Radiant observed better agreement among the models in showing a trough settling over the eastern half of the nation.
“As a result, the forecast trends cooler in this region. An upper level ridge is over most of the West, and the period favors above normal temperatures in the West and near normal readings across the eastern half.”
Meanwhile, Gulf of Mexico production levels remained impacted early Tuesday in the aftermath of former Hurricane Barry, posting only minor gains since the storm made landfall over the weekend, according to Genscape Inc.
“Gulf region production has inched up only slightly since Hurricane Barry moved onshore,” Genscape senior natural gas analyst Rick Margolin said. “We estimate today’s volume at 9.16 Bcf/d, and yesterday at 9.24 Bcf/d, about 0.3 Bcf/d above Saturday, when volumes sank to a 545-day low.
“Producers and system operators in the Gulf of Mexico have posted notice that personnel are returning to facilities but that operations will not begin to ramp back up until facility inspections are conducted and completed.”
August crude oil futures were trading 9 cents higher at $59.67/bbl just after 8:30 a.m. ET, while August RBOB gasoline was trading fractionally higher at $1.9336/gal.