Rebounding production and a lack of heating demand in the outlook kept the pressure on natural gas futures in early trading Monday. The November Nymex contract was down 5.5 cents to $2.349/MMBtu at around 8:40 a.m. ET.
Weather models over the weekend generally lowered demand expectations, according to Bespoke Weather Services.
“While we still have elevated demand this week” from both cooling degree days in the South and heating degree days (HDD) in the West, “there is little in the way of notable cooler air seen” from days six through 15 of the latest outlook Monday, Bespoke said. “After this week, HDDs become the most important component of the total demand picture, meaning that the lack of colder air in play” will soon “push demand levels below normal.”
Overall, balances continue to appear weak, according to the forecaster, which said it’s looking for at least one more triple-digit injection from the Energy Information Administration this week.
“We do not yet have another forecast beyond this week, but that is under the assumption that at least a little tightening can occur after the price decline,” Bespoke said. “With weather weaker as well, risks remain skewed to additional downside.”
Maxar’s Weather Desk said the overall themes carried over from last week in its updated six- to 10-day forecast Monday, including more above-normal temperatures for the southern United States and “variability along the Northern Tier.
“A round of below normal temperatures accompanies high pressure into the East to start the period, and a second round of high pressure will limit warming in the Midwest and East during the second half as well,” Maxar said. “However, this second surface high is of Pacific origins, and generally near normal coverage is associated.”
Further out in the 11-15 day period, the forecaster said the outlook points to steady coverage of above normal temperatures for the South and closer to normal temperatures for the northern United States.
Meanwhile, looking at the supply picture, Genscape Inc. said it revised higher its estimate of Lower 48 dry gas production to 92.32 Bcf/d for Friday, putting output back above the 92 Bcf/d mark for the first time in nearly a month.
“Production continued to hover around the 92 Bcf/d level through the weekend,” Genscape senior natural gas analyst Rick Margolin said. “Since Friday, production has been averaging more than 1.17 Bcf/d above the month-to-date average before Friday.”
November crude oil futures were trading 86 cents lower at $55.05/bbl at around 8:40 a.m. ET, while November RBOB gasoline was off about 1.4 cents to $1.5925/gal.