Warmer trends in the latest weather data, including signals that cold will have trouble finding its way into the demand centers of the eastern Lower 48, sent natural gas futures several cents lower in early trading Friday. The March Nymex contract was down 5.0 cents to $1.870/MMBtu at around 8:30 a.m. ET.
Forecasts from both the American and European weather models “moved solidly warmer” overnight, extending warmer changes that had shown up in Thursday’s data, according to Bespoke Weather Services. Overall, both models as of early Friday were projecting 20 fewer gas-weighted degree days compared to data issued 24 hours earlier, the forecaster said.
“The reason for the change is due to more of a positive Eastern Pacific Oscillation being forecast, resulting in warmer changes downstream across much of the nation,” Bespoke said. “This, along with the positive Arctic Oscillation, another warmer signal, has been the dominant signal for the entire winter season to date.
“As of right now, we see little reason to believe this changes in early March, meaning that any below normal temperatures are more likely in the western United States, with warmth growing more favored again in the eastern half.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 151 Bcf withdrawal from storage inventories for the week ending Feb. 14, beating consensus expectations for a withdrawal in the mid- to upper 140s Bcf. The figure came in higher than the 136 Bcf five-year average but fell short of the year-ago draw of 163 Bcf. Working gas in storage stood at 2,343 Bcf, 613 Bcf above last year and 200 Bcf above the five-year average, EIA said.
This week’s print marked the third largest withdrawal of the season so far, according to analysts at Tudor, Pickering, Holt & Co. (TPH).
“Supply remains the focus, and after steady declines through January from around 96 Bcf/d down to about 94 Bcf/d, things have plateaued and even recovered modestly,” the TPH analysts said. “Production currently sits at 94.6 Bcf/d, with the trailing 30-day average at 94.4 Bcf/d, and we’re modeling a February average of 94.3 Bcf/d, dipping to 93 Bcf/d as we move through the second quarter.
“With demand set to wane as we move into shoulder season, further declines are likely required if any sort of a recovery is in the cards, especially given the roughly 2 Bcf/d of price sensitive power gen demand that likely gets backed out if prices rise materially above $2/Mcf.”
March crude oil futures were trading 79 cents lower at $53.09/bbl at around 8:30 a.m. ET, while March RBOB gasoline was off about 3.1 cents to $1.6384/gal.