Natural gas futures were trading close to even early Tuesday as the latest forecasts continued to show colder temperatures spreading into the eastern United States during the last week of October. The November Nymex contract was trading 0.8 cents higher at $2.288/MMBtu shortly after 8:30 a.m. ET.
In its updated 11-15 day outlook Tuesday, Maxar’s Weather Desk made “no significant changes” to the forecast, with the pattern continuing to show forcing from the tropics bringing cooler temperatures to the eastern half of the Lower 48.
Models show a negative Western Pacific Oscillation and negative North Atlantic Oscillation setup that would also focus below normal temperatures in the Midcontinent, the forecaster said.
“The forecast takes the middle ground between the additionally cooler output from the American model and the less cool output from the Euro,” Maxar said. “Above normal temperatures are steady in the Southwest, including much aboves in Southern California with offshore flow.”
As for the six- to 10-day period, Maxar said it expects low pressure to deepen over the Midcontinent early in the period, “bringing moisture and above normal temperatures to the Eastern Half. Much aboves are in Texas on Day 6, the eastern Midwest on Day 7 and along the East Coast on Day 8. Following the passage of low pressure, all of the Midcontinent turns cooler with a round of below-normal temperatures in the mid to late period. The forecast is cooler in the Central and South versus previous in association.”
Looking longer-term, Energy Aspects said it sees risks for a net injection for the month of November if there is milder than normal weather. The firm’s estimates put the market on track for injections through the week ended Nov. 15, assuming close to 10-year normal temperatures. Recent modeling suggested end-November inventories from 3.73-3.74 assuming normal weather, just below a projected end-October carryout at 3.77 Tcf.
This underscores “how moderate we anticipate withdrawal activity will be in November,” Energy Aspects said. “A swing milder in the weather could easily start the winter off on a bearish foot by a two-fold sway to sentiment: forcing the commencement of net monthly withdrawals only in December and the typical bullish enthusiasm zapper of a mild first month of the heating season.”
Additional November injections could have knock-on effects by adding to the potential end-March inventory level, which the firm’s recent projections placed at 1.85 Tcf.
“The amount of demand lost or gained in November is not huge in the context of the entire heating season,” Energy Aspects said. “However, any additional volumes being directed into storage above our projected end-March carryout would have reverberations beyond heating season 2019/20, especially given an increasingly likely set of risks that would loosen balances -- notably in the export market and industrial sector.”
As for this week’s report, analysts at Tudor, Pickering, Holt & Co. (TPH) said they’re bracing for an “ugly print” well into the triple digits -- potentially even record-setting for a fall injection -- from the Energy Information Administration’s upcoming storage data.
“That said, it’s not all negative, as current week data shows a 3.9 Bcf/d week/week jump in residential/commercial demand, and the return of Cove Point (down since Sept. 20) is adding about 0.8 Bcf/d,” pushing liquefied natural gas feed gas demand above 7 Bcf/d “for the first time,” the TPH analysts said. “Cumulative injections continue to track about 40% above norms, and we’re modeling another five weeks of builds, driving exit levels about 6% above the five-year average.”
November crude oil futures were trading around $53.40/bbl shortly after 8:30 a.m. ET, off about 19 cents from Monday’s settle. November RBOB gasoline was trading fractionally higher at around $1.6155/gal.