Mixed trends in the overnight guidance had natural gas futures trading close to even early Tuesday. The March Nymex contract was up 0.9 cents to $1.775/MMBtu shortly after 8:30 a.m. ET.
Looking at the major weather models, the American data added several heating degree days overnight, while the European model essentially reversed demand gains that had shown up in its Monday afternoon run, according to NatGasWeather.
“Overall, the weather data has been colder with a frigid shot late this week and slightly colder with a weather system across the northern U.S. late next week,” NatGasWeather said. However, based on “the milder periods surrounding these cold shots” the pattern continues to look “quite bearish.”
Unlike earlier in the winter when colder temperatures were teased in the longer range forecasts, recent weather data has shown “a rather bearish setup for days 12-16,” the forecaster added. “As such, until the back end of the forecast again looks more ominous, weather patterns are likely to maintain a bearish bias. But the cold shot late this week is rather frigid, so there’s potential for cash prices to find support in the days ahead, which could potentially stall the drop in futures.”
Based on “materially colder” trends in the forecast for later this week, Genscape Inc. said it expects chilly temperatures associated with a system moving from the Rockies into the Midwest, Texas and Southeast to lift Lower 48 demand above the 100 Bcf/d mark by Wednesday. The firm expects demand to peak Thursday at 119 Bcf/d.
“While Lower 48 population-weighted temperatures from Wednesday through Friday will run slightly colder than normal, the surge will be short-lived; temperatures are expected to quickly revert to this winter’s pattern of warmer than normal,” Genscape senior natural gas analyst Rick Margolin said.
Meanwhile, looking ahead to Thursday’s Energy Information Administration storage report, Energy Aspects issued a preliminary estimate for a 111 Bcf withdrawal for the week ending Feb. 7. The firm estimated a 5% week/week decline in gas-weighted heating degree days, presenting a drag on residential/commercial demand.
Liquefied natural gas feed gas demand “appears to have hit an all-time weekly high of 9.3 Bcf/d” during the period, Energy Aspects said. “Mexican net trade, which should bear some impact of the Constitution Day holiday, has nevertheless come in weaker than expected at 5 Bcf/d, the weakest average since the week ending Jan. 3.”
Energy Aspects estimated a 0.5 Bcf/d week/week decline in production given late-week cold, including declines in the Permian Basin and in the Rockies.
March crude oil futures were trading 88 cents higher at $50.45/bbl shortly after 8:30 a.m. ET, while March RBOB gasoline was up 1.1 cents to $1.5323/gal.