• BREAKING: U.S. EIA reports injection of 31 Bcf into natural gas storage for the week ending Nov. 13
  • Liquefied natural gas volumes held strong
  • Production continued to climb, pressuring spot prices

December Natural gas futures edged up on Wednesday, led higher by steadily solid liquefied natural gas (LNG) volumes and weather forecasts that shifted cooler.

EIA storage Nov. 13

The December Nymex contract rose 2.0 cents day/day and settled at $2.712/MMBtu. January, however, traded sideways most of the day and closed down six-tenths of a cent at $2.838.

NGI’s Spot Gas National Avg. declined 37.5 cents to $2.170 as cold air moved out of the Upper Midwest, and rising production combined with expectations for higher temperatures weighed on prices in the Northeast.

Though temperatures are projected to rise the second half of this week and remain elevated into next week across much of the country, forecasts Wednesday called for bouts of cold air for much of the northern half of the nation in the final week of November.

While the southern United States will remain unusually mild and the overall weather pattern points to seasonally light demand, the major weather models early Wednesday added demand to their outlooks overnight, according to NatGasWeather. Both the American and European datasets showed at least 10 additional gas-weighted degree days (HDD) compared to their projections a day earlier.

“Bigger picture, the coming pattern still is to the bearish side due to national HDDs being below normal most of the next 15 days and with the Dec. 1-2 period still showing a mild overall U.S. set-up,” NatGasWeather said. “But added demand is added demand, and the overnight data did gain several Bcf in demand back.”

The forecaster said the next major price catalyst could be the Energy Information Administration’s (EIA) storage report covering the week ended Nov. 13.

NGI is modeling a 23 Bcf injection for the report, scheduled to be released Thursday at 10:30 ET. Last year, EIA recorded a 66 Bcf withdrawal for the period.

A Bloomberg survey found estimates ranging from a withdrawal of 9 Bcf to an injection of 26 Bcf, with a median of a 22 Bcf increase. A Reuters poll found estimates spanning from a pull of 22 Bcf to an increase of 27 Bcf and a median of a 19 Bcf injection.A Wall Street Journal poll, meanwhile, landed at an average injection of 10 Bcf, though estimates ranged from a decrease of 25 Bcf to an increase of 22 Bcf.

Though there is a gulf between low and high estimates, the midpoint of each survey calls for a modest increase, which would mark a departure from seasonal norms. The five-year average is a pull of 24 Bcf.

Energy Aspects issued a preliminary estimate for a 19 Bcf build. The firm pointed to warm weather during the week and estimated a 40% deficit in heating degree days for the week versus the 10-year average.

EIA reported an injection of 8 Bcf into storage for the week ending Nov. 6. The increase lifted inventories to 3,927 Bcf, up from 3,731 Bcf a year earlier and ahead of the five-year average of 3,751 Bcf. That result was bearish compared to a week earlier, when EIA reported a withdrawal of 36 Bcf that marked the first pull of the season.

Most analysts anticipate withdrawals to resume with next week’s EIA report, but concerns about hefty storage levels linger.

“This injection is likely to be the last of the season, with the potential for 55-60 Bcf withdrawals to be reported over the following three weeks,” EBW Analytics Group analysts said. “This week’s reported injection, however, could increase the year/year storage surplus by as much as 115-120 Bcf.”

Analysts noted Wednesday that LNG feed gas levels remained around 10 Bcf and near record highs, reflecting steady export demand ahead of winter. “The LNG markets remain buoyant,” said shipbroker Fearnleys AS.

But domestic production increased further Wednesday, with preliminary estimates showing output topped 90 Bcf for the first time since last spring. Production has climbed about 3 Bcf over the past month.

Should production continue to rise, increased economic activity and stronger energy demand in the Lower 48 could prove necessary to maintain balances coming out of the winter. While that is dependent in part on the pandemic, positive vaccine news continues to point to a favorable tipping point in 2021.

Pfizer Inc. and German partner BioNTech SE said Wednesday their vaccine proved 95% effective in a late-stage trial in preventing both mild and serious forms of the virus. Additionally, Moderna Inc. said Monday test results showed its vaccine to be highly effective in protecting people from the virus.

Notably, Pfizer also said its vaccine proved highly effective in protecting older adults, who are among the most vulnerable to the disease. The company said it would seek approval from the Food and Drug Administration this month.

“With hundreds of thousands of people around the globe infected every day, we urgently need to get a safe and effective vaccine to the world,” said Pfizer CEO Albert Bourla.

Cash Called Lower

Spot gas prices dropped Wednesday, as weather demand faded and production in key regions climbed.

While Wednesday started off cold, warm air settled in over much of the Midwest, and forecasts called for chilly temperatures across the Great Lakes and Northeast to climb back toward comfortable before the close of the trading week.

Heating demand could remain weak for several days, if forecasts prove accurate, before resuming next week.

“After a rather warm set-up for most of the U.S. late this week through the weekend, with highs of 50s to 80s, another weak cold shot is expected into the Midwest early next week,” NatGasWeather said.

At the same time as the cold backed away production stepped up, Genscape Inc said.

The firm said production had rebounded in the Northeast in recent weeks and has gradually climbed back in western plays this fall, as well, contributing to total Lower 48 output hanging near 90 Bcf this week – a high point since April.

Against that backdrop, cash prices fell across every region of the country, led lower by drops in the Northeast and West Texas.

Algonquin Citygate sank $2.140 day/day to an average of $2.220, while Tenn Zone 6 200L fell $2.190 to $2.630.

El Paso Permian, meanwhile, shed 88.0 cents to $1.080, and Waha lost 82.0 cents to $1.075.

In the Midwest, Chicago Citygate fell 24.0 cents to $2.075. In Appalachia, Columbia Gas lost 21.0 cents to $1.750.