Coming off a strong run higher over the past few sessions, natural gas futures pulled back slightly in early trading Tuesday as updated weather models showed no significant changes to the temperature outlook. The July Nymex contract was off 1.5 cents to $3.337/MMBtu at around 8:45 a.m. ET.
There were no major changes to the weather outlook overnight, according to NatGasWeather. The American and European models added a few cooling degree days for this weekend but lowered cooling demand expectations for late next week, the firm said.
“National demand will be near normal next week as the northern U.S. becomes comfortable with highs of upper 60s to 80s, while seasonally hot across the southern U.S. with highs of upper 80s to 100s, although a touch cooler in the overnight data,” NatGasWeather said. “However, the overnight data maintained national demand increasing to strong levels June 26-29 as upper high pressure over the southern U.S. expands a little further north and eastward to keep this important period just hot enough to satisfy.”
Meanwhile, the National Hurricane Center (NHC) as of early Tuesday was monitoring a disturbance causing disorganized showers and thunderstorms over the Bay of Campeche in southern Mexico.
While not expected to move much over the next day or two, the system “should begin to move northward by Thursday, and a tropical depression is likely to form late in the week when the low moves across the central or northwestern Gulf of Mexico,” the NHC said.
By Friday parts of the northern Gulf Coast could see heavy rains, according to the forecaster.
NatGasWeather said clouds and showers from the storm could impact natural gas demand, with liquefied natural gas (LNG) cargo delays also possible should the system “bring heavy squalls to LNG facilities.
“The system could also bring minor production disruptions in the Gulf of Mexico, but overall it’s more likely to bring stronger bearish impacts versus bullish,” NatGasWeather added.
Looking ahead to this week’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 61 Bcf injection for the week ended June 11.
“Gas in power ratched up by more than 9 Bcf/d” during the report week, Energy Aspects said. “This early cooling season heat saw daily burn hit around 39 Bcf/d for two days” during the period. “That demand strength was more than sufficient to offset production of above 92 Bcf/d and weak LNG feed gas demand from maintenance.”
Last year EIA recorded an 86 Bcf injection for the similar week, while the five-year average is a build of 87 Bcf.
July crude oil futures were trading 79 cents higher to $71.67/bbl at around 8:45 a.m. ET, while July RBOB gasoline was up fractionally to $2.1796/gal.
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