Further cooler momentum in the latest round of forecast data, against a backdrop of supply disruptions in the Gulf of Mexico (GOM) and in the Northeast, had natural gas futures rallying in early trading Monday. The November Nymex contract was up 16.6 cents to $2.907/MMBtu at around 8:40 a.m. ET.
Weather data shifted cooler over the weekend, resulting in “another sizable addition” of gas-weighted degree days (GWDD) to the latest forecast from Bespoke Weather Services early Monday.
“Changes come throughout the 15-day forecast, and we now project October’s total GWDD count to be over 340, nearly 50 GWDD above the projection from just 10-12 days ago, quite a substantial move,” Bespoke said. “This is still well under the total demand level of the last two Octobers, however, but closer to normal. Best cooling versus normal lies in the middle of the nation, with occasional pusles into the East. Southern demand is strong the next few days, still thanks to heat” keeping cooling demand higher locally.
Meanwhile, liquefied natural gas feed gas volumes Monday appeared to show “little impact” from Hurricane Delta’s landfall late last week, rising to 7.5 Bcf/d, the firm said.
On the supply side, the Bureau of Safety and Environmental Enforcement reported that more than 1.6 Bcf/d of gas production in the GOM, or around 62% of total supply out of the region, remained shut in as of Sunday. Roughly 91% of oil production, or nearly 1.7 million b/d, was also shut in as of Sunday.
The lingering Delta shut-ins come as a force majeure on the Columbia Gas (TCO) system has been disrupting around 0.5 Bcf/d of production out of West Virginia and Pennsylvania since Saturday, and the disruption is expected to continue until further notice, according to Genscape Inc.
“In total, approximately 588 MMcf/d of southbound and westbound flows are being restricted, with the most impactful restrictions occurring” at a meter in West Virginia, Genscape analyst Anthony Ferrara said.
TCO began restricting volumes due to operating conditions on the Texas Eastern Transmission system that have limited deliveries between the two pipelines, the analyst said.
“Furthermore, TCO is experiencing reduced storage injection capabilities as storage nears capacity, increased line pack levels, and lower forecasted demand as weather remains mild in the region to start the week,” Ferrara said.
From a technical perspective, after gains to close out last week the bears enter this week facing a “reverse or else situation,” according to ICAP Technical Analysis analyst Brian LaRose.
The analyst pegged levels at $2.809-2.820 and at $2.905 as “their last chances for avoiding a push to fresh highs in the November contract. In the event these obstacles are unable to halt the advance we would be prepared for a rise to $3.106-3.181…even 3.242-3.300.”
November crude oil futures were off 55 cents to $40.05/bbl at around 8:40 a.m. ET, while November RBOB gasoline was down about 1.3 cents to $1.1900/gal.
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