Rebounding liquefied natural gas (LNG) feed gas demand helped offset cooler weather trends to keep natural gas futures prices steady early Tuesday. The September Nymex contract was off 0.6 cents to $2.204/MMBtu shortly after 8:30 a.m. ET.
Guidance trended further cooler overnight, according to NatGasWeather, which tallied a drop of 2-4 cooling degree days from all major weather models. The pattern still favors “numerous weather systems impacting the northern and southern U.S.” in a setup unlikely to provide enough heat to satisfy the market.
“Demand will remain strong the next several days due to hot conditions across the western, southern and eastern U.S.,” NatGasWeather said. “But the pattern late this week through the first several days of September continues to look unimpressive, besides a brief warm break between weather systems over the East around Aug. 27-28. But with cooler overnight trends, the data looks increasingly bearish Aug. 29-Sept. 3.”
After strength in the cash market appeared to support prices in Monday’s trading, “it will be of considerable interest how prices react the next few days as heat across the southern and eastern U.S. eases.”
Meanwhile, LNG feed gas deliveries are rebounding back to levels observed prior to recent maintenance-related impacts, according to Genscape Inc.
“Today’s aggregate nominations are just a bit over 5.65 Bcf/d, which is within 0.2 Bcf/d of the July average,” senior natural gas analyst Rick Margolin said. “Aggregate noms in August had fallen to as low as 3.7 Bcf/d on Aug. 8 on the combination of maintenance and commissioning activities.”
Nominated deliveries to Cheniere Energy Inc.’s Sabine Pass terminal for Tuesday “are up to 2.96 Bcf/d, an 18-day high with maintenance winding down...Corpus Christi nominations for today are at a record high 1.46 Bcf/d.” Genscape’s LNG analysts observed over the weekend that “our monitors indicated Corpus Train 2 is fully operational,” Margolin said. “That said, caution should be used with top-day nominations at Corpus, as we have recently seen downward revisions, and the terminal has not yet received FERC authorization to commence commercial service.”
Recently LNG feed gas demand had eased off of highs reached in late July at around 6.4 Bcf/d, noted analysts with Tudor, Pickering, Holt & Co. (TPH). But feed gas demand should continue to push higher into next year, they said.
“All in, we expect feed gas demand to push 7 Bcf/d by year-end, up from about 4.5 Bcf/d in December of last year,” the TPH team said. “From there, eyes will move back to Freeport and Cameron, as both are expected to add Trains 2 and 3 in the first half of 2020, pushing total demand from LNG north of 9 Bcf/d.”
September crude oil futures were trading 11 cents lower at $56.10/bbl shortly after 8:30 a.m. ET, while September RBOB gasoline was up fractionally to $1.6712/gal.