Natural gas futures snapped a three-day losing streak, edging up Monday as weather models hinted at what could be a warmer-than-normal summer. However, with a looming storage “tsunami,” the June Nymex gas futures contract settled only three-tenths of a cent higher than Friday’s close at $1.826. July climbed .008 cents to $2.085.

Spot gas prices were mixed Monday as a late-season cold blast hit the Northeast, driving up demand. NGI’s Spot Gas National Avg. climbed 2.0 cents to $1.645.

After what is likely the last cold shot now exiting the eastern United States, warmer weather is set to emerge in the coming weeks, quickly dropping late-season heating degree days from outlooks, according to Bespoke Weather Services. The firm sees above-normal temperatures setting up as soon as the six- to 15-day timeframe, which it believes could be the pattern that sets up “more often than not” this summer.

“So, here and now, above-normal temperatures are not bullish in terms of demand, but in a few weeks, they will move in that direction if this pattern indeed does hold, as climatological normal temperatures continue to rise,” Bespoke said.

NatGasWeather shared a similar view. The forecaster said that as the northern United States becomes “ideal” after the early-week cool shot, the southern states will likely become very warm to hot as high pressure strengthens. This is expected to bring an increase in coverage of the mid-80s to 90s from Texas to the Mid-Atlantic Coast, “but still not quite hot enough to intimidate.

“Once the southern U.S. gets a little hotter with greater coverage of 90s, weather sentiment will flip from bearish to bullish. This needs close watching as it wouldn’t take much of a hotter trend to bring a rapid increase in forecast cooling degree days,” NatGasWeather said.

Given the unseasonably cold weather to start the week, the June Nymex contract could hold its ground for another day or two, according to EBW Analytics Group. Week 2, however, is likely to bring an astonishing 65-70 Bcf decline in weather-driven demand, “ushering in a period of monster injections that could bring the year/year storage surplus to more than 800 Bcf.”

An early view of this week’s government storage data points to another triple-digit build. Last week, the Energy Information Administration reported a 109 Bcf injection that boosted Lower 48 inventories to 2,319 Bcf, more than 50% above year-ago levels and around 20% above the five-year average.

As the market shifts its focus to the coming storage “tsunami” and additional liquefied natural gas (LNG) export curtailments are announced, the June contract is likely to come under considerable downward price pressure, “potentially testing new contract lows,” EBW said.

On Monday, NGI’s U.S. LNG Export Tracker showed feed gas deliveries holding relatively steady at around the 7.0 Dth mark, but analysts have said that in addition to the more than 30 canceled cargoes for June, others are likely through October.

With the Nymex futures curve showing $2 gas beginning in July, price improvement has largely stemmed from a projected decline in associated gas production because of the pullback in drilling activity due to the oil market downturn.

After collapsing into negative territory in April, U.S. oil pricing remains soft and global pricing isn’t much better. The swift downturn sparked a historic move by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to curb production; on Monday, Saudi Arabia said it would cut oil output by another 1 million b/d. Kuwait and the United Arab Emirates (UAE) followed up with extra cuts of their own.

Removing these supplies means that crude storage tanks around the world may avoid filling, if demand ramps up as expected and new lockdown measures are not imposed, according to Rystad Energy.

“Before this cut, with the most recent global production shutdown data, we were approaching the maximum operating levels in July,” said Rystad Head of Oil Markets Bjornar Tonhaugen. “Filling tanks above the maximum operating capacity require operators to use the contingency space, which is usually reserved for safety hazards or operational disruptions.”

The additional unilateral cuts by Saudi, UAE and Kuwait “is not totally surprising,” and could be a reflection of an expectation of sub-compliance by fellow OPEC-plus members (such as Iraq) and of the continued supply-overhang due to risk of a lackluster demand recovery, according to Rystad. In the firm’s latest estimate before the new cuts were announced, analysts were expecting global onshore stocks to build by an astonishing 9.0 and 3.0 million b/d during May and June, respectively, “really pushing the limits of the available storage capacity.

“An extra 1.2 million b/d cut will not rebalance the market, but will surely remove strain from the storage infrastructure and buy time to wait for the demand rebound,” Tonhaugen said.

Nevertheless, both U.S. and international crude prices settled lower on Monday.

Tudor, Pickering, Holt & Co. (TPH) said Monday that so far, U.S. oil supply shut-ins have underwhelmed its expectations, and the firm revised higher its associated gas supply forecasts for the second and third quarters. This presents a “challenging summer” for natural gas, with inventories pushing the high end of the five-year range, according to analysts.

“Production currently sits at around 92 Bcf/d, and our revised May estimate now sits at 91.6 Bcf/d, up from 90.0 Bcf/d previously,” said the TPH team. “For June, we’re expecting volumes to continue to decline to a monthly average of 89.7 Bcf/d (was 87.3 Bcf/d), which we forecast to be at the low point for supply, as shut-ins are expected to begin reversing out in July/August, with the crude strip currently sitting in the mid-to-high $20s.”

The outlook for 2021 remains “largely unchanged,” with analysts projecting gas prices will rise to the $2.75-3.00 range. However, the path to get there “now looks a lot more challenging” as inventories could exit the injection season at 4.0 Tcf, according to TPH.

“As a result, we expect pricing to remain sub-$2 through the summer before beginning a meaningful recovery starting in the fourth quarter.”

Spot gas prices were a mixed bag as heat started to build in the southern United States and chilly weather lingered in the Northeast. Most moves were fairly small, however, even with a couple of new pipeline maintenance events set to begin this week.

From Tuesday to Friday, Gulf South Pipeline Company is scheduled to perform maintenance at the Hall Summit compressor station in Bienville Parish, LA, curtailing up to 400 MMcf/d of receipt capacity at the nearby “EXPAN REC UPS HALL SUMMIT Group,” according to Genscape Inc.

“Based on historical nominations, the Hall Summit compressor station maintains little operational flexibility in the form of available capacity, suggesting flow impacts are likely to materialize as a result,” said Genscape analyst Preston Fussee-Durham.

With intimidating heat not yet in the forecast, prices across most of Louisiana were lower on Monday. Benchmark Henry Hub slipped 3.5 cents to $1.700, while points in the northern part of the state picked up as much as a penny.

Southeast spot gas markets were largely unchanged from Friday but ended the day in positive territory. Appalachia and Northeast markets were stronger, with Millennium East Pool posting one of the largest increases as the pipeline is set to undergo annual maintenance starting Tuesday on the Hancock compressor station, resulting in a complete unit outage.

According to the maintenance schedule, this event, set to continue through May 17, will have medium potential impact to firm services and high potential impact to nonfirm services for flows past the Wagoner West throughput meter. The meters past Wagoner West have net demand averaging 906 MMcf/d and a max of 1.04 Bcf/d over the last month, the majority of which is going to the Ramapo interconnect with Algonquin Gas Transmission, according to Genscape.

“Other significant demand locations affected include the CPV Valley Power Plant and the Wagoner Line K2 interconnect with Columbia Gas Transmission,” Genscape analyst Josh Garcia said.

Millennium’s April 2020 index of customers shows that locations past Wagoner West have 1.28 Bcf/d of firm capacity contracted, more than what’s currently flowing, “although that does not mean 100% of flows are firm capacity,” according to Garcia.

“This event has the potential to significantly impact flows, although just how much is currently uncertain. Millennium has said that it will release additional notices detailing segment impacts, which should hopefully clarify the severity of this outage.”

Millennium East Pool jumped 10.0 cents to average $1.420 for gas delivered on Tuesday.

Meanwhile, Texas Eastern Transmission (Tetco) provided an update following the explosion last week that cut capacity through the Owingsville compressor station to zero. Tetco indicated that capacity through Owingsville would remain at zero for a minimum of two to three weeks as the National Transportation Safety Board (NTSB) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) conduct investigations.

Farther downstream in the Northeast, Algonquin Citygate cash climbed 13.0 cents to $1.565.

Texas spot gas markets ended the day in the red, although most losses were small. Waha fell 6.5 cents to average $1.470 for Tuesday’s gas day. Markets across the Rockies also dipped just slightly from Friday’s levels, with Northeast Sumas cash sliding 4.0 cents to $1.600.