A warmer weather outlook overnight, showing additional heat arriving later this month, helped lift natural gas futures in early Tuesday trading. The September Nymex futures contract was up 2.0 cents to $2.125/MMBtu shortly after 8:30 a.m. ET.
The overnight guidance advertised further hotter trends for a period of widespread national heat expected around Aug. 19-23, when high pressure is forecast to dominate most of the country, according to NatGasWeather.
“However, much of the overnight data favors heat fading across both the northern and southern U.S. Aug. 24-28 as weather systems arrive with showers and cooling in a not hot enough pattern,” the forecaster said. This is especially the case for the Global Forecast System, which favors daily national cooling degree day totals “dropping to near normal in an increasingly bearish setup.
“...It’s important to note the European model remains hotter than the rest of the weather data, but it also shows heat fading around Aug. 24-25. If there were to be hotter trends Aug. 25-28, it could flip weather sentiment to solidly bullish, but without it, we think it might be difficult for the natural gas markets to view the overall pattern through August as intimidating enough.”
Hotter trends in the forecast Monday were unable to break the market out of a range-bound trading pattern, with resistance holding early in the day at $2.157, observed analysts at EBW Analytics Group.
“With weather-driven demand expected to drop later this week, the forward curve could drift lower today and tomorrow,” EBW said. “Hopes for a repeat of last week’s moderately bullish storage surprise, however, will most likely limit any downward price movement, especially given forecasts for a return of hotter weather in Week 2.
“A renewed push higher would not be surprising next week. We continue to expect natural gas to test new lows, however, before the end of the month.”
As for Thursday’s Energy Information Administration storage report, Energy Aspects issued a preliminary estimate for a 60 Bcf injection.
“We peg production week/week at 0.3 Bcf/d higher,” the firm said. “Gas-fired power demand, boosted by hot weather and low gas prices, will be up by 1.3 Bcf/d week/week. That increase in gas burn will not be enough to compensate for the 1.6 Bcf/d week/week decline in feed gas demand.”
Despite the loss of feed gas demand due to maintenance at Cheniere Energy Inc.’s Sabine Pass liquefied natural gas terminal, Energy Aspects said its “end-August projected carryout, which last week stood at 2.99 Tcf, is moderately lower at 2.94 Tcf...What has helped to moderate our carryout even with feed gas disruptions is a more than 2.3 Bcf/d increase in our modelled August power burn week/week owing to a shift in the 15-day forecast and lower gas prices.”
September crude oil futures were off 45 cents to $54.48/bbl shortly after 8:30 a.m. ET, while September RBOB gasoline was trading fractionally lower at $1.6604/gal.