• December Nymex futures off 1.6 cents to $2.621; January down 1.4 cents to $2.714
  • “Overall, the pattern remains plenty cold enough through the coming weekend” but not for Nov. 18-25, says NatGasWeather
  • “Aside from weather, production growth remains the elephant in the room”: Energy Aspects
  • U.S. dry gas production down 2.4 Bcf/d d/d on weather, maintenance impacts: Genscape 

With more seasonal temperatures expected after this week’s widespread Arctic chills, the natural gas futures market shrugged off colder-trending guidance Tuesday to send prices slightly lower. The December Nymex contract eased 1.6 cents to settle at $2.621/MMBtu after trading as high as $2.685 and as low as $2.607; January settled at $2.714, off 1.4 cents.

In the spot market, predictions for potentially record-setting cold to spread across regions east of the Rockies accompanied a mix of price moves Tuesday, including gains along the East Coast and discounts in the Midwest; NGI’s Spot Gas National Avg. added 16.0 cents to $3.030.

The midday Global Forecast System data Tuesday added more heating degree days to the 15-day outlook, improving the demand picture for the period starting next week and continuing through Nov. 25, according to NatGasWeather.

“Overall, the pattern remains plenty cold enough through the coming weekend,” the forecaster said. “...However, the data still isn’t cold enough Nov. 18-25, even after colder trends.” The northern and central portions of the country will still see weather systems during this time frame, “they just will be rather seasonal for this time of year, with only modest cold anomalies.”

Looking ahead to this week’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 3 Bcf withdrawal for the week ended Nov. 8. Coal generation increased nearly 10 GW week/week in response to the increase in Henry Hub prices during the period, according to the firm.

Owing to a “roaring start” to gas-weighted heating demand this month, Energy Aspects said its balances now indicate a 250 Bcf withdrawal for November, versus 40-50 Bcf under a 10-year normal weather scenario.

“Taken over the course of the full heating season, that change versus normal will result in a striking 1.7 Bcf/d of weather-aided demand,” the firm said. “However, this difference is not enough to hit the reset button on balances just yet.

“...Aside from weather, production growth remains the elephant in the room. The most recent EIA Natural Gas Monthly data confirm a whopping 2.4 Bcf/d month/month increase in August output. Flow data for October point to a still-very-high 1.4 Bcf/d month/month increase. Production has been running higher than expectations and could still continue to do so this month, although we are flagging possible weather-related disruptions.”

The broader trends point to continued growth in Lower 48 supply, but in the near-term Genscape Inc.’s daily production estimate showed a 2.4 Bcf/d day/day drop in output for Tuesday.

“While the number is likely to be revised following later cycle revisions, declines were expected given the cold weather and maintenance,” Genscape senior natural gas analyst Rick Margolin said. “...The nominations-based estimate of East production is showing a nearly 1.1 Bcf/d day/day decline. More than 0.5 Bcf/d of declines are being reported in Northeast Pennsylvania, led by declines” on the Transcontinental Gas Pipe Line (Transco), as well as “smaller drops on volumes hitting” the Stagecoach and Tennessee Gas Pipeline (TGP) systems.

“Ohio production is also down due to disruptions to flows on gathering systems” connected to the Rockies Express Pipeline, along with the continuation of maintenance on Nexus Gas Transmission, according to Margolin.

Genscape’s estimate for Texas production showed a nearly 0.83 Bcf/d drop for Tuesday, while the firm’s separate Permian Basin estimate was also down close to 0.48 Bcf/d.

‘Widespread Record Cold’

Despite a wave of unseasonably chilly temperatures moving through the Lower 48 this week, spot price moves were mixed Tuesday. Day-ahead prices at benchmark Henry Hub added 4.0 cents to $2.725.

“A frigid Arctic blast continues across much of the U.S. east of the Rockies,” with lows expected to range from near zero to the 20s Tuesday night, NatGasWeather said. “The cold front will bring rain and snow through the East” by Tuesday night, “with lows for major Northeast cities dropping into the teens and 20s the next few nights to aid very strong national demand.

“A reinforcing cold shot is expected across the Northeast Friday through Sunday. The West will be mostly mild and dry, with highs of 50s to 80s, coolest in the Northwest. Much of the northern, central, southern and eastern U.S. will warm early next week, closer to normal.”

The National Weather Service was calling for “widespread record cold” from the Plains to the East Coast over the next few days.

“A vast majority of the central and eastern U.S. will have below normal temperatures as the Arctic air mass spreads from the Plains into the Ohio/Tennessee Valley and eastward,” the forecaster said. “Hundreds of locations may set new records during this time.”

After posting big gains Monday, East Coast hubs continued to trade at elevated levels Tuesday, though a few locations recorded downward adjustments. Transco Zone 6 NY gained $1.340 to average $5.600, while Transco Zone 5 rallied $1.340 to $5.495. In Appalachia, Texas Eastern M-3, Delivery jumped $1.385 to $5.350.

Several pipelines operating in the East issued operational flow orders amid this week’s cold, including Transco (Zones 4 through 6 specifically) and TGP, Genscape analyst Josh Garcia noted.

Meanwhile, Texas Eastern Transmission (aka Tetco) and Algonquin Gas Transmission “have suspended no-notice service for gas day Nov. 13 (Wednesday),” Garcia said. “Algonquin also plans to increase capacity at its Southeast and Cromwell compressors to 1,723 MMcf/d and 1,260 MMcf/d, respectively, by as early as Tuesday, with plans to increase capacity to 1,824 MMcf/d and 1,296 MMcf/d by Saturday.”

Columbia Gas (aka TCO) warned of “potential critical days for storage and transport” starting Wednesday and continuing until further notice, while Dominion (specifically within its PL-1 system) also had restrictions in place due to this week’s cold temperatures, Garcia noted.

National demand was on track to reach 102.3 Bcf/d Tuesday, marking the first 100 Bcf/d-plus demand day of the 2019/20 winter, according to preliminary estimates from Genscape. Wednesday’s demand total was poised to climb even higher, reaching 109.7 Bcf/d, which would set a record high for the month of November, the firm said.

In the East, Genscape’s regional demand estimate was up 6.4 Bcf/d day/day to 35 Bcf/d for Tuesday, with that figure expected to rise to 40.7 Bcf/d for Wednesday and remain “well above” 35 Bcf/d through Friday, Genscape’s Margolin said.

After climbing 3.6 Bcf/d Tuesday, South Central demand was expected to rise another 2.8 Bcf/d to 28.8 Bcf/d for Wednesday.

“Most of the Midwest demand gains have already been realized,” Margolin said. Monday’s total reached 24.2 Bcf/d, up 5 Bcf/d compared to the weekend. Regional demand was expected to peak Wednesday at 27.6 Bcf/d “before receding daily well into the middle of next week.”

After a number of Midwest hubs posted discounts in Monday’s trading, prices in the region receded further on Tuesday. Chicago Citygate slid 4.5 cents to $2.625.

Elsewhere, prices traded close to even for much of the Gulf Coast. In East Texas, Houston Ship Channel dropped 5.5 cents to $2.580, while further south Texas Eastern S. TX eased 1.5 cents to $2.595.