A drop in liquefied natural gas (LNG) demand kept the pressure on gas futures near the front of the curve in early trading Monday.
The October Nymex contract was down 7.4 cents to $1.974/MMBtu at around 8:40 a.m. ET.
The start of annual fall maintenance at the Dominion Energy Cove Point LNG terminal has cut more than 700 MMcf/d of feed gas deliveries to the facility, according to Genscape Inc. Analyst Allison Hurley said in a note to clients early Monday that the Cove Point facility underwent fall outages lasting 24 days in 2019 and 21 days in 2018.
“Implied feed gas deliveries to Cove Point LNG for the last 14 days have been stable, averaging 716 MMcf/d,” Hurley said. “Feed gas has plummeted to zero for today” coinciding with the start of maintenance.
Genscape as of early Monday estimated total U.S. LNG feed gas deliveries at 5.08 Bcf/d, down 1.64 Bcf/d from the previous seven-day average. Aside from Cove Point, the firm observed declines in deliveries to the Freeport and Sabine Pass LNG terminals compared to Friday’s volumes.
Meanwhile, forecasters were monitoring yet another named storm in the Gulf of Mexico (GOM) early Monday.
At 8 a.m. ET, Tropical Storm Beta was about 70 miles southeast of Port O’Connor, TX, traveling west at 6 mph and carrying maximum sustained winds of 50 mph, according to the National Hurricane Center (NHC).
“On the forecast track, the center of Beta will continue to move toward the central coast of Texas and will likely move inland by tonight,” the NHC said.
Beta arrives at a time when areas along the Texas and Louisiana coasts “are already experiencing tropical storm conditions,” Genscape analyst Josh Garcia said.
GOM production still hasn’t recovered to levels observed prior to former Hurricane Laura last month, according to Garcia.
“GOM production had an August month-to-date high of 1.80 Bcf/d on Aug. 18, prior to Hurricane Laura’s landfall,” Garcia said. “In the early part of September, GOM production recovered to as high as 1.68 Bcf/d on Sept. 10. Hurricane Sally caused another dip, and GOM production has averaged 863 MMcf/d since Sept. 13.”
The firm estimated GOM production at 1.11 Bcf/d as of Sunday.
Over the weekend, changes to the American and European weather models led Bespoke Weather Services to add a few gas-weighted degree days to its national forecast for the end of this month into October.
“Despite the change, projected demand over the next 15 days remains well below normal levels, and far below what we saw during the same period last year,” Bespoke said. “Our lean continues to be to the warmer side for October as a whole, which would offer a continuation of a lower demand regime, although at this time, the ends of the model runs are not headed in that direction.”
October crude oil futures were off $1.07 to $40.04/bbl at around 8:40 a.m. ET, while October RBOB gasoline was down about 4.9 cents to $1.1874/gal.
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