Hotter overnight trends in the latest European data helped boost natural gas futures several cents higher early Wednesday. The September Nymex futures contract was trading 4.5 cents higher at $2.192/MMBtu shortly after 8:30 a.m. ET.
The latest European guidance heading into Wednesday’s trading trended hotter compared to 24 hours earlier, diverging from the American guidance, which trended cooler, according to Bespoke Weather Services.
“We view the changes as mostly noise, with the overall theme remaining the same, which is a hot-biased pattern for the foreseeable future,” Bespoke said. “We could see a dip down close to normal in the back of the 11-15 day, but we still believe the pattern will generally run hotter than normal on into September as well. What does change is the regional breakdown, as the focus now starts to shift from anomalous heat in the South to stronger heat into the Midwest and East, even back into the West.”
While the hotter trends in the overnight European data likely don’t account for the entire move higher in prices early Wednesday, “weather does remain quite supportive for the foreseeable future, and these are still historically low prices in a market that is heavily short, so it doesn’t take much to move prices higher,” Bespoke said.
In its latest six- to 10-day forecast Wednesday, Radiant Solutions noted a warmer outlook for the Midwest and East.
“A slower frontal passage through the East is part of the reasoning, and temperatures are forecast to peak in the 90s on Days 6 and 7 in Boston and New York City,” the forecaster said. “All of the eastern half moderates during the mid to late period, accompanying a round of high pressure. Any cooler changes are in parts of the West; although, a shift in ridging toward the Southwest likely supports temperatures nearing daily records here. At the peak, the forecast has temperatures in the low to mid 110s in Las Vegas and Phoenix.”
As for the 11-15 day outlook, Radiant’s latest forecast trended warmer to start the period in the Midwest “but is consistent with previous expectations elsewhere.” This includes a “broadly warmer than normal” pattern, with the West and East being the focus for above normal temperatures.
Meanwhile, Kinder Morgan Inc.’s Gulf Coast Express (GCX) pipeline, which is expected to uncork additional volumes of associated gas from the constrained Permian Basin when it comes online later this year, is showing signs of progress toward full in-service.
According to Genscape Inc., GCX has been consistently receiving volumes from El Paso Natural Gas near the Waha hub in West Texas since Aug. 8.
“After averaging about 84 MMcf/d over the weekend, scheduled volumes have climbed to 260 MMcf/d as of the Timely Cycle,” Genscape analyst Colette Breshears said in a note to clients early Wednesday. “This marks the first material deliveries from any interstate pipeline to the new intrastate pipeline, which is currently flowing interim volumes prior to coming fully online in late September.
“Genscape’s proprietary infrared monitoring of the Waha Header System continues to show elevated levels of compression at the facility, while exports to Mexico from West Texas have stayed steady, suggesting that additional volumes are likely being rerouted from intrastate systems and local gathering lines onto GCX.”
September crude oil futures were down $1.91 to $55.19/bbl shortly after 8:30 a.m. ET, while September RBOB gasoline was off about 4 cents to $1.6957/gal.