With coronavirus demand impacts continuing to weigh on the market, and with the latest forecasts shedding weather-driven demand, natural gas futures were trading slightly lower early Tuesday. The April Nymex contract was down 2.0 cents to $1.795/MMBtu at around 8:30 a.m. ET.
The downward pressure on natural gas prices this week likely stems of expectations for widespread coronavirus containment measures to destroy demand, NatGasWeather said. As for the latest weather data, the forecaster noted a drop in heating demand expectations overnight from the American and European datasets but with “no major changes” to the overall pattern.
“As is, it would take colder trends for next week and beyond for the pattern to be considered cold enough, though still with just enough demand across the northern U.S. to be considered seasonal,” NatGasWeather said. “But with the overnight data losing a little demand, the natural gas markets could notice.”
Energy Aspects recently updated its end-March storage carryout projection to 1.99 Tcf, with near-term fundamentals remaining relatively steady over the past week despite the volatility in markets.
“The present set of fundamentals does not currently support” the $1.90/MMBtu-plus pricing that was observed last week, Energy Aspects said. “There are risks to lower demand stemming from even greater congestion issues” in the global liquefied natural gas market, as well as “uncertainties linked to the spread of Covid-19 and its impact on demand.
“In addition, impacts to domestic demand including industrial demand and the power sector cannot be ruled out...To be fair, weaker crude prices, if sustained, would have a real bearing on associated production volumes, but that move would really begin to take hold later in 2020 and then in 2021.”
Meanwhile, the broader economic turmoil -- major disruptions to daily life, a jittery stock market -- has been hard to ignore.
“History is being made before our eyes -- and, alas, not in a good way,” Raymond James & Associates analysts said in a note to clients early Tuesday. “The S&P 500 continued its wild swings on Monday, down 12% following its 9.3% gain on Friday. The sell-off marks the S&P’s largest one-day drop since 1987.”
WIth crude prices also down sharply, “energy stocks followed the commodity downwards,” they said.
April crude oil futures were trading at $28.76/bbl, up 6 cents, at around 8:30 a.m. ET, while April RBOB gasoline was up about 3.7 cents to about 72.7 cents/gal.