With markets still awaiting more clarity on the potential demand impacts of continued measures to contain the coronavirus outbreak, natural gas futures were trading lower early Monday. The April Nymex contract was down 4.0 cents to $1.564/MMBtu as of around 8:40 a.m. ET.
Natural gas prices continue to move in apparent sympathy with the broader economy, according to Bespoke Weather Services. The firm noted that prices dropped as low as $1.519 over the weekend as equity markets continued to face major uncertainties from the coronavirus.
“This general trend likely continues this week, although as time rolls on, data should gain in importance as we assess how much demand destruction may be occurring with things shutting down in much of the nation,” Bespoke said.
One area of demand showing strength as of Monday’s readings was liquefied natural gas (LNG) feed gas deliveries, according to Genscape Inc. The firm said volumes delivered to Lower 48 LNG terminals have “rebounded with a vengeance” over the past few days.
“Since Saturday, aggregate feed gas deliveries have been well in excess of 9.1 Bcf/d, with Saturday’s volumes setting a 50-day high by flirting with the 9.2 Bcf/d mark,” Genscape senior natural gas analyst Rick Margolin said. “In the middle of last week, volumes had fallen off a cliff to a 126-day low of 6.3 Bcf/d due to several train outages” at the Sabine Pass and Corpus Christi terminals.
“All trains at all six export terminals now appear to be running normally.”
On the supply side, Genscape’s estimate for Lower 48 dry gas production totaled 93.26 Bcf/d for Monday.
“Since freeze-offs from February began to abate, production has held remarkably steady this month-to-date, averaging 93.3 Bcf/d and having stayed within a range of 92.2 Bcf/d on the low end and 94 Bcf/d on the high side,” Margolin said. “Compared to February, month-to-date production is running about 0.39 Bcf/d stronger.”
In terms of the weather outlook, at this point in the season, day-to-day shifts in the forecasts won’t generally lead to large shifts in demand absent “extremes” in temperature deviations from normal, according to Bespoke.
As of early Monday “we are not seeing extremes, although the pattern does continue to exhibit a slightly bearish tendency, still running below normal in terms of total demand,” Bespoke said. “Changes since late last week are quite small, however. We are still looking warm enough for some cooling demand in places like Texas this week, which could give burns a little boost versus what they otherwise would be in a broadly warmer-than-normal late March pattern.”
May crude oil futures were up 27 cents to $22.90/bbl at around 8:45 a.m. ET, while April RBOB gasoline was off about 6.0 cents to around 54.6 cents/gal.