With a broadly warmer than normal September pattern continuing to lend support, natural gas futures were trading close to even early Tuesday. The October Nymex contract was up 1.4 cents to $2.695/MMBtu shortly after 8:30 a.m. ET.
The latest guidance heading into Tuesday’s session showed a minor cooler adjustment for the 11-15 day period, according to Bespoke Weather Services. But the forecaster described the upcoming pattern as still “very warm” overall, with warmer than normal temperatures expected to “remain quite persistent” over the Midwest, East and South.
“Given the look of the projected pattern at Day 15, above normal temperatures seem likely to roll right into the first week of October,” Bespoke said. “Should this warm state persist,” it could “gradually turn into more of a bearish/low demand factor, but we still have some time before that transition occurs.”
Energy Aspects said its weekly balances showed “stout” storage injections starting with the week ending Sept. 27.
“While our forecasts for storage injections have shifted since mid- to late-August on the warmer forecast (and realized) weather, our projected end-October inventory is near 3.76 Tcf, not a level that should induce gas rationing nor point to anything that suggests tight fundamentals,” the firm said in a recent note.
Forecasts showing “an extension of hot summer weather into September” have provided the catalyst for “a positioning-led rally. Indeed, that sharp move up has occurred against fundamentals that are somewhat tighter...but not particularly tight in the grand scheme of things.”
Meanwhile, signs of the first commercial flows on the Sur de Texas-Tuxpan pipeline have coincided with a spike in exports to Mexico, according to Genscape Inc. The firm estimated Mexico exports at 5.9 Bcf/d for Tuesday.
“Sur de Texas is reporting it is scheduled to flow over 0.6 Bcf/d of gas received from South Texas,” Genscape senior natural gas analyst Rick Margolin said. “This comes just a few weeks after the pipe’s developers -- TC Energy and IEnova -- reached an accord with the Mexican government to initiate operation.”
The higher flows on Sur de Texas-Tuxpan have also coincided with a “notable drop” in liquefied natural gas (LNG) sendout from Mexico’s Altamira LNG terminal, Margolin said.
As of 8:30 a.m. ET, crude oil futures had cooled off after Monday’s extraordinary rally. The October contract was down 80 cents to $62.10/bbl. October RBOB gasoline was trading fractionally lower at $1.7521/gal.