Natural gas futures pared their recent gains in early trading Tuesday as the latest forecasts continued to show a mild seasonal pattern arriving later this month. After climbing 6.9 cents in the previous session, the May Nymex contract was down 2.0 cents to $2.729/MMBtu at around 8:50 a.m. ET.
Overnight changes to the forecast data were mixed, including 2-3 heating degree day (HDD) increase from the American model and a decrease of 2-3 HDD from the European model, according to NatGasWeather.
Overall there were “no major changes” to the temperature outlook, with above-normal demand expected through the weekend on a series of chilly systems bringing lows in the 20s to lower 40s, the firm said.
However, the American and European models “continue to favor a more seasonal pattern over the U.S. April 27-May 2 as comfortable highs of 60s to 80s rule most regions besides hotter 90s at times over the Southwest into Texas,” NatGasWeather said.
For further price gains the pattern for days eight through 15 will likely need to show either hotter or colder trends, as current projections point to “mostly comfortable temperatures and near normal demand,” according to the firm.
Meanwhile, looking ahead to Thursday’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 54 Bcf injection for the week ended April 16.
The firm said it is modeling a lower injection rate for the period based on a 0.8 Bcf/d week/week decline in production on maintenance in Appalachia, a 1.2 Bcf/d increase in power burns and a 0.5 Bcf/d increase in flows to Mexico.
“Our weekly supply-demand balances point to an end-April carryout some 20 Bcf lower” versus projections formulated back in March, Energy Aspects said in a recent note to clients. “…However, looking ahead to May there are some initial signs that balances could loosen, particularly as mild weather and strong wind output have trimmed our estimate of early-injection season power burn.”
The firm modeled a 2.42 Tcf carryout for the end of May but cautioned that lower production or higher-than-expected flows to Mexico could tighten its balances.
A 2.42 Tcf end-May figure “would take our end-October carryout to 3.58 Tcf under our current price deck of $2.79 for the injection season,” Energy Aspects said. “Provisionally, such a carryout would be high enough to merit a price adjustment, given our balances indicate sequential production growth throughout the heating season 2021-2022.”
However, factors including “the lack of clarity on some aspects of Appalachian maintenance and the potential stickiness in Mexican export increases…mean we are maintaining our outlook for now,” the firm said.
May crude oil futures were up 30 cents to $63.68/bbl at around 8:55 a.m. ET, while May RBOB gasoline was up fractionally to $2.0516/gal.
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