Estimates showing a day/day drop in production helped natural gas futures extend their recent gains in early trading Tuesday. After picking up 6.0 cents in the previous session, the May Nymex contract was up 3.0 cents to $2.820/MMBtu at around 8:45 a.m. ET.
The latest daily production estimate from Wood Mackenzie Tuesday showed a 2.4 Bcf/d day/day decline in Lower 48 supply, with output dropping to 89.1 Bcf/d from 91.5 Bcf/d as of Monday.
“The largest impacts are concentrated in the Northeast, where there is planned pipeline maintenance as well as what appears to be unannounced operator field maintenance,” Wood Mackenzie analysts Nicole McMurrer and Laura Munder wrote in a note to clients.
Flows in Northeast Pennsylvania were down 0.6 Bcf/d early Tuesday, according to the firm’s estimates. This coincides with planned maintenance on the Millennium Pipeline, the analysts said.
McMurrer and Munder also pointed to maintenance events on the Nexus Gas Transmission and Rockies Express pipelines that were expected to restrict flows on Tuesday in Ohio.
Meanwhile, weather models overnight continued to show colder trends for late this week over the Great Lakes and Northeast, according to NatGasWeather.
However, the latest forecast data “was still rather bearish with the overall setup most of the next 15 days as large stretches of the U.S. experience comfortable highs of 60s to 80s,” the firm said. “While highs will occasionally reach the 90s over areas of the southern U.S. during the first half of May, coverage isn’t expected to be widespread enough to intimidate.”
Further, any increase in cooling degree days in southern parts of the country will be offset by declining heating degree days over northern regions, NatGasWeather said.
The firm pegged weather the next two weeks as a bearish factor for prices heading into Tuesday’s trading.
As for bullish factors, NatGasWeather pointed to the recent run of Energy Information Administration (EIA) storage reports that have missed versus market expectations, along with strong exports via liquefied natural gas and via pipeline to Mexico.
Looking ahead to this week’s EIA report, Energy Aspects issued a preliminary estimate for a 9 Bcf build for the week ended April 23.
This estimate is “based on a seasonal lowering in gas heating intensity,” the firm said in a recent note to clients. “We believe the primary risk skews even lower, given that the misses in the prior two weeks’ reports imply continued resilience in gas-heating intensity.”
June crude oil futures were up 53 cents to $62.44/bbl at around 8:45 a.m. ET, while May RBOB gasoline was up about 1.9 cents to $1.9980/gal.
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