With demand impacts expected from Tropical Storm Beta hovering over the Texas coast, natural gas futures extended their slide in early trading Tuesday.
The October Nymex contract was down 0.9 cents to $1.826/MMBtu at around 8:50 a.m. ET, while January was off 4.0 cents to $3.277.
The October contract opened this week’s trading with a 21.3-cent swoon in Monday’s session, in contrast to gains along the winter strip.
Analysts at EBW Analytics Group pointed to declines in liquefied natural gas (LNG) feed gas demand and weak weather-driven demand as the major catalysts driving Monday’s losses in the front month.
“The November-March gains were triggered in part by reports that power had been partially restored” at the Cameron LNG terminal, where operations have been suspended since last month’s Hurricane Laura made landfall in the area, according to the EBW team. Restored power could see Sempra Energy begin the restart process at the terminal’s Train 2, analysts said.
“With Tropical Storm Beta finally making landfall along the Texas coast, demand in the South Central region is likely to remain deeply depressed today, preventing the October contract from rebounding significantly — and potentially putting renewed downward pressure on November-March prior to this week’s storage report on Thursday,” the EBW analysts said.
In an 8 a.m. ET advisory the National Hurricane Center (NHC) warned that Beta was “expected to stall inland over Texas” Tuesday, delivering continued heavy rains over parts of the middle and upper Texas coasts.
The storm was about 10 miles east-southeast of Victoria, TX, and traveling northwest at 3 mph, forecasters said. The NHC warned that the middle and upper Texas coasts were expected to see an additional six-to-12 inches of rainfall, with isolated totals of up to 20 inches.
Beta will bring localized flooding to the region and is likely to keep production totals suppressed by around 1-2 Bcf/d, according to NatGasWeather.
“Beta will also continue to impact LNG facilities at Freeport, Sabine Pass and Cameron, with several inches of rain,” contributing to feed gas declines, NatGasWeather said.
Looking at weather in the rest of the country, much of the United States is expected to see “comfortable highs of 70s and 80s for light national demand,” the forecaster said. “Hotter exceptions continue over the Southwest into California, with 90s and 100s, while cool exceptions will arrive into the Northwest Wednesday to Thursday as a weather system brings much needed rain.”
Over the past 24 hours the American and European models have added demand for late this month into early October, showing an early season cool shot over the Great Lakes and Northeast, as well as heat building in the Southwest and California, NatGasWeather said.
October crude oil futures were up 29 cents to $39.60/bbl at around 8:45 a.m. ET, while October RBOB gasoline was off fractionally to $1.1737/gal.
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