With the latest forecasts mixed and with analysts monitoring a number of “moving pieces” in the fundamentals outlook, natural gas futures prices were steady early Wednesday. The September Nymex futures contract was trading 0.1 cents lower at $2.217/MMBtu shortly after 8:30 a.m. ET.
The overnight weather data trended somewhat hotter for early next week over the southern and eastern portions of the country, according to NatGasWeather. But the data still points to a “rather bearish setup” that would result in lighter than normal demand for the end of August into early September.
“Unless hotter trends show up for early September, weekly storage builds are likely to print quite large versus normal and approach 90 Bcf-plus,” NatGasWeather said. “The natural gas markets must clearly know the pattern late this week onward will be far from hot enough to intimidate, yet prices have held up well.
“...If prices rally further, it would likely be for other reasons since medium and long range weather patterns continue to look bearish.”
The front month contract traded in a range-bound pattern Tuesday despite a lot of movement in the underlying fundamentals for the market to consider, observed analysts with EBW Analytics Group.
“This seeming stability masks moving pieces just beneath the surface,” EBW said. “LNG feed gas flows jumped by 1.0 Bcf/d day/day, and could climb even more sharply soon. Start-up of Sur de Texas is also in sight. But production is continuing to soar, gas is starting to flow over Gulf Coast Express, and power sector demand will soon plummet.
“It remains to be seen how these conflicting market drivers will sort out,” according to EBW. “Notably, however, support for the September contract was strong yesterday just below $2.19. If Sabine Pass Trains 3 and 4 come back online quickly or Thursday’s storage report is bullish, a test of resistance at $2.29 is not out of the question.”
Looking at this week’s Energy Information Administration storage report, Energy Aspects issued a preliminary estimate for a 56 Bcf build for the period ending Aug. 16.
The firm’s estimates showed a small increase in production for the week offset by a decline in Canadian imports to leave supply flat week/week.
“Our models indicate record power demand” in the Electric Reliability Council of Texas territory, “and heat throughout the south was not enough to push gas burn above the highs observed in late July, when cooling load was stronger on a national basis,” Energy Aspects said. “We estimate total U.S. gas generation near 40 Bcf/d.”
October crude oil futures were up 59 cents to $56.72/bbl shortly after 8:30 a.m. ET, while September RBOB gasoline was trading about 2.4 cents higher at $1.7051/gal.