In the wake of a sharp sell-off to open the week, additional warm trends in the forecasts had natural gas futures sinking even further in early trading Tuesday. The expiring December Nymex contract was trading 4.8 cents lower at $2.483/MMBtu shortly after 8:40 a.m. ET. January was off 3.8 cents to $2.546.
As of early Tuesday, both the American and European models had continued to move in the warmer direction over the previous 24 hours, according to Bespoke Weather Services. Day/day changes were focused in the Dec. 4-8 time frame “as the Pacific side of the pattern simply cuts off the connection to stronger cold, and the Atlantic block vanishes as well.”
Differences remained between the models, with the American model older than its European counterpart, Bespoke said. Despite this, the American dataset “shows a pattern that would likely lead to bigger warmth into mid-December,” while the European model pointed to less warming out into the 16-20 day window.
“We do still lean toward a warmer mid-December pattern, based on our best assessment of the upcoming tropical forcing evolution,” the forecaster said.
Coming off recent milder forecast trends, meteorologists at Genscape Inc. now expect Lower 48 population-weighted heating degree days (HDDs) to peak next Tuesday (Dec. 3) at 21.6 HDDs, part of a stretch of colder-than-normal temperatures expected next week.
“However, current expectations are not as cold as previous weather model runs suggested,” Genscape senior natural gas analyst Rick Margolin said. “Current weather forecasts should lift demand to about 103 Bcf/d by early next week, with the cold being geographically dispersed. However, those projected levels will be well short of the winter-to-date highs logged earlier this November.”
This comes as production has been “back on the upswing,” according to Margolin.
Freeze-offs and maintenance affected output earlier this month, but recent daily estimates from Genscape have shown Lower 48 production topping 94 Bcf/d over the last four days. Monday set a new record high at 94.39 Bcf/d, the analyst said.
Meanwhile, this week’s Energy Information Administration (EIA) storage report, scheduled for noon ET Wednesday because of the Thanksgiving holiday, is likely to show a notably smaller withdrawal compared to last week, according to Energy Aspects. The firm issued a preliminary estimate for a 32 Bcf pull for the week ending Nov. 22.
“Both residential/commercial demand and power burn are set to decline on more moderate weather, chopping 9.1 Bcf/d week/week off of total demand,” Energy Aspects said. “Production will continue to creep higher, by a projected 0.3 Bcf/d week/week.”
At around 8:40 a.m. ET, January crude oil futures were trading 35 cents higher at $58.36/bbl, while December RBOB gasoline was up about 1.5 cents to $1.6893/gal.