A decline in demand from liquefied natural gas (LNG) export facilities over the weekend had natural gas futures trading lower early Monday. The July Nymex contract was off 1.5 cents to $1.767/MMBtu at around 8:45 a.m. ET.
Flows to U.S. LNG facilities dropped below 4 Bcf/d to average 3.9 Bcf/d over the weekend, according to Tudor, Pickering, Holt & Co. (TPH) analysts.
“The biggest drop came from Sabine Pass, which dipped to a new low of 1.1 Bcf/d (about 35% utilization), making Cameron the largest demand source over the weekend at 1.4 Bcf/d,” the TPH analysts said. “Flows to Cameron have been quite resilient, with a trailing 30-day utilization of 96% and current rates at 72%, which is supported by offtake to Japanese utilities.”
On the Mid-Atlantic coast, the Dominion Cove Point LNG export facility “has also seen resilient demand, sitting at 83% utilization,” the analysts added. Cove Point “benefits from its location in Maryland with access to discounted Northeast feed gas.”
On the supply side, Bespoke Weather Services said the latest production data showed a small decline in output, likely a result of shut-ins from Tropical Storm Cristobal over the weekend.
However, the drop in LNG demand “is the data point that has the market concerned, as traders want to see evidence that we can maintain the tightening of supply/demand balances with LNG at much lower levels,” Bespoke said.
As of 8 a.m. ET, the National Hurricane Center (NHC) had downgraded Cristobal to a tropical depression. The storm was about 50 miles south-southeast of Monroe, LA, and carrying maximum sustained winds of 35 mph.
“On the forecast track, the center of Cristobal should move through northeastern Louisiana today, through Arkansas and eastern Missouri tonight and Tuesday, and reach Wisconsin and the western Great Lakes by Wednesday,” the NHC said.
Looking at the bigger weather picture for the Lower 48, Bespoke said the latest guidance heading into Monday’s trading came in slightly hotter compared to Friday’s forecast. Bespoke noted a “small gain in forecast demand this week, thanks to more coverage of above normal temperatures in the eastern U.S. overriding less heat down in Texas, and a hotter look in the 11-15 day period from the Midwest to the East.
“In between, we do see a cooler interlude centered on this weekend in the wake of a trough passing through the East, which is enough to hold projected” gas-weighted degree days “down to just slightly above normal levels.”
July crude oil futures were trading 72 cents lower at $38.83/bbl at around 8:45 a.m. ET, while July RBOB gasoline was up fractionally to $1.2198/gal.
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