An increasingly milder April outlook sapped any early momentum in natural gas futures trading on Tuesday. The May Nymex gas futures contract settled at $1.650, off 7.4 cents day/day and at the low end of its 9-cent trading range. June fell 5.3 cents to $1.826.

Spot gas prices also retreated, giving back some of the gains brought on by a chilly outlook for this week. NGI’s Spot Gas National Avg. fell 7.0 cents to $1.535.

After an initial step higher early Tuesday amid conflicting weather data, futures quickly backpedaled as the general consensus that the latter part of April would be mild became clear. Overnight Monday, the Global Forecast System (GFS) model gained more than 10 heating degree days on colder trends for the April 21-28 period, according to the NatGasWeather. However, the European model “didn’t agree” and trended slightly milder; by midday, the GFS got on board with the warmer outlook.

Both models were “still quite chilly” versus normal through the coming weekend, but then milder thereafter as cold air was seen retreating into Canada, NatGasWeather said. Furthermore, both models suggest that mild conditions would likely prevail through the end of the month.

With shutdowns and stay-at-home measures still in place amid the coronavirus pandemic, the front of the Nymex futures curve is expected to remain under pressure, especially as the typical shoulder-season demand lull gets into full swing. However, with a reduction in associated gas production growth becoming increasingly likely as exploration and production companies across the Lower 48 cut spending and activity from low oil prices, gas prices for the winter and beyond have remained strong. On Tuesday, the winter strip (November-March) fell only 2.5 cents on average, while Calendar Year 2021 held above $2.60.

At current levels, the liquids producing community is paving the way for a continued recovery at Henry Hub, according to Mobius Risk Group. The potential for producers with optionality between liquids and gas-centric locations to exercise their ability to “flex up methane output” while reducing the number of barrels they deliver into a crippled global crude market also will be closely monitored, the firm said.

“The finalized OPEC deal certainly helps put a dent in the unprecedented demand side losses, but it is not as clear what the actual response from U.S. producers will be,” Mobius said.

Meanwhile, another risk factor, albeit a temporary one, faces both the natural gas and crude markets beginning in June. As both commodities are increasingly reliant on export demand to soak record supply, “the possibility of an early wave of tropical activity could be a gut punch to markets suffering from differing excess BTUs in storage,” Mobius said.

Colorado State University meteorologists expect the 2020 Atlantic hurricane season to be more active than usual, with 16 named storms, eight hurricanes and four major hurricanes.

“This is not to say that an early wave of tropical activity in the Gulf of Mexico would be a crushing blow for either market, but rather to highlight that such an occurrence would accelerate the strain on domestic storage,” Mobius said.

After an unusually mild winter, gas storage facilities exited the withdrawal season with slightly under 2 Tcf in stocks. Last week, the Energy Information Administration (EIA) reported the first injection of the year, with 38 Bcf added to inventories.

Looking ahead to this week’s EIA report, Energy Aspects issued a preliminary estimate for a 60 Bcf build for the week ending April 10, which would push stocks to 2,084 Bcf. The firm’s estimates show “plummeting demand” during the period, including a 1.6 Bcf/d week/week drop-off in residential/commercial demand, a 1.2 Bcf/d decline in liquefied natural gas (LNG) feed gas and a 0.6 Bcf/d drop in Mexican pipeline exports.

“The last two EIA prints have underscored the beginning of notable losses in demand,” Energy Aspects said.

As for LNG, NGI’s U.S. Export Tracker shows feed gas volumes climbing to around 8.73 million Dth on Tuesday, a little more than a week after deliveries sunk to a three-week low amid declines at the Corpus Christi terminal and an outage at Sabine Pass. Train 1 at Sabine Pass has since restarted, and “there are currently no outages” at the Louisiana export terminal, according to Genscape Inc. LNG analyst Allison Hurley.

Meanwhile, Mexican cross-border trade has been weak, likely the result of seasonal maintenance on NET Mexico, according to Energy Aspects. Cross-border pipeline flows have been capped at 5 Bcf/d in recent days, and total volumes dropped despite Valley Crossing delivering a record-high 1.4 bcf/d into Sur de Texas-Tuxpan (STT), the firm said. STT deliveries into Monte Grande have averaged 0.5 Bcf/d since April 3, also a record high.

However, Energy Aspects said flows are not likely to revert to pre-maintenance levels of 5.5-5.6 Bcf/d once maintenance is complete because of Covid-19 quarantine measures in Mexico that are set to continue through at least April 30.

“Moving forward, it remains to be seen what the impacts of social distancing will be on Mexican cross-border flows,” Energy Aspects said. “Currently, our reference case pegs the disruption at close to 0.5 Bcf/d, which would be similar to a weekend effect. However, stricter measures, like those implemented in Italy, could see that loss versus baseline levels expand to as much as 1.5 Bcf/d if we assume the impact is closer to that seen for Christmas holiday closures.”

As a result, Energy Aspects said its weekly balances are pointing to an April net injection on the order of 240-260 Bcf. With mounting facility closures — both industrial and commercial — the firm cautioned that the margin of error “is larger than usual. We anticipate that weekly storage injections will flirt with the triple-digit level by the end of April.”

Spot gas prices started to unravel Tuesday even as chillier air arrived across much of the central and northern United States.

Widespread low temperatures in the 10s to 30s did little to stave off declines, with pleasant conditions on the West Coast prompting a large sell-off in the region. SoCal Border Avg. next-day plunged 22.0 cents day/day to $1.405. Farther north, Malin was down 10.0 cents to $1.460.

Double-digit declines also were prevalent across the Rockies, with Ruby-Receipts tumbling 16.5 cents to $1.385.

The losses extended farther upstream in the Permian Basin as maintenance on El Paso Natural Gas (EPNG) was restricting westward flows. Timely cycle data for Tuesday’s gas day showed EPNG’s “TOM MIX” flow point going to zero flow for gas day Wednesday, however, the pipeline is expected to fully restore capacity for Thursday, according to Genscape.

“Potential reroute options for a small portion of the affected nominations include EPNG’s high and low pressure lines, Oracle and Vail,” Genscape analyst Matthew McDowell said. “Oracle has been flowing at full capacity since April 2, but Vail has around 80 MMcf/d of spare capacity.”

El Paso-Permian cash was down 14.5 cents to a 28.0-cent average, while other market hubs across Texas posted similar decreases.

In the Midwest, Chicago Citygate next-day gas dropped 10.5 cents to $1.690, on par with losses seen in Louisiana and across the Southeast.

The East Coast posted the only increases day/day as the cold front headed that direction and another blast was expected to quickly follow to keep demand elevated through the weekend.

Algonquin Citygate cash jumped 27.0 cents to $1.770, while Transco Zone 6 non-NY rose a more modest 8.0 cents to $1.580.

Over the second half of April, Algonquin Gas Transmission is scheduled to conduct a series of outages along its mainline, restricting capacity from Stony Point, NY, to Burrillville, RI. The first two are tentatively scheduled to last through July, but most inspection work that requires capacity constraints will occur within the next two weeks, according to Genscape.

These outages could curtail up to 340 MMcf/d of flows through Stony Point compared to the month-to-date (MTD) max, or 132 MMcf/d compared to Stony Point’s MTD average, the firm said. These outages could be more impactful farther upstream on the pipe.

“Cold weather moving into New England this week should provide some bullish support for Northeast prices, and these outages will add to that; although, it goes without saying that the demand response will be weaker than normal,” Genscape analyst Josh Garcia said.