Expectations for a return to more seasonal temperatures across key regions of the Lower 48 later this month helped support modest gains for natural gas futures in early trading Tuesday. The April Nymex contract was up 3.9 cents to $2.816/MMBtu at around 8:45 a.m. ET.
The latest temperature projections for the March 12-16 time frame trended colder for the eastern two thirds of the Lower 48, Maxar’s Weather Desk said in its updated forecast early Tuesday.
This change is “echoed among the various models over the past 24 hours. Still, above normal temperatures favor the region, while below normal coverage is limited to the West.”
In the six- to 10-day window, from Sunday through March 11, Maxar said its latest forecast shifted warmer for the Midwest, South and East, with colder changes in the Interior West.
“Above normal temperatures are from the Midcontinent points east,” the forecaster said. “Much and strong aboves are steady in the Midwest, with much aboves also preceding late period low pressure in the East.”
NatGasWeather characterized overnight changes in the forecast data as mixed. Both the American and European models “show similar timing in swings in demand through mid-March,” but the European is several heating degree days colder, the firm said.
“It’s late this weekend and next week where the pattern becomes quite bearish as upper high pressure stretches from Texas to the Northeast with comfortable highs of 50s to 80s,” NatGasWeather said. “…Colder air over the West March 8-13 will spread eastward March 14-16 for a near normal pattern and with near normal demand.”
The firm said it will be watching to see if the April contract can hold above the $2.76-2.77 level in Tuesday’s trading.
“We continue to view this as an important level bears need to take out for another leg lower as front month prices have bounced from this support level numerous times over the past few months,” NatGasWeather said. With weather shaping up to be mild through the first half of this month, “any sustained rally will have to be for other reasons, which is still possible since the balance and supplies are much tighter compared to this time last year.”
Looking at the storage picture, assuming normal weather for the back half of March analysts at Energy Aspects said in a recent note that they’re estimating an end-March carryout of 1.50 Tcf.
“A 10% warmer-than-normal scenario to end March would provide upwards of an 80 Bcf cushion to our 1.5 Tcf carryout estimate,” the analysts said. “Residential/commercial demand would be 3.7 Bcf/d lower on average…Should weather realize somewhere in between 4% and 10% warmer than normal, we expect our end-March estimate to grow to at least 1.55 Tcf.”
April crude oil futures were up 1 cent to $60.65/bbl at around 8:45 a.m. ET, while April RBOB gasoline was off fractionally to $1.9414/gal.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |