With the latest government inventory data showing Lower 48 stockpiles falling further behind historical norms, natural gas futures climbed a couple cents higher in early trading Friday. The June Nymex contract was up 2.3 cents to $2.996/MMBtu at around 8:45 a.m. ET.
The Energy Information Administration (EIA) on Thursday reported an injection of 71 Bcf into U.S. natural gas storage for the week ended May 7. The agency posted an implied flow of 75 Bcf — on par with expectations — but it reclassified the amount of working gas in storage previously by 4 Bcf, resulting in the net 71 Bcf print.
The result compared favorably to the five-year average build of 82 Bcf and the year earlier injection 104 Bcf. It was roughly on par with the median estimates found in polls.
Analysts at Tudor, Pickering, Holt & Co. (TPH) noted that it marked a second straight week that the EIA report came in bullish versus seasonal norms, with the current deficit to the five-year average widening to 5%.
“The South Central continues to be an area worthy of additional focus, with four consecutive below normal builds, taking storage to minus 9% versus the five-year,” the TPH analysts said. Liquefied natural gas (LNG) sendout, exports to Mexico and industrial consumption “are all contributing to strong demand in the South Central region, which also has limited coal to gas switching capacity to serve as a correcting mechanism, creating a particularly strong setup for regional hubs (Henry included) this summer.”
Meanwhile, as for recent LNG demand, Wood Mackenzie estimates showed sendout dropping from a recent high of 11.4 Bcf/d earlier this month to 9.4 Bcf/d for Thursday and 9.6 Bcf/d for Friday. The firm pointed to indications of an outage at Train 3 of the Cameron LNG facility.
“According to WoodMac proprietary monitoring, Cameron Train 3 has been down since Tuesday,” Wood Mackenzie analyst Amir Rejvani said in a note to clients early Friday. “Cameron 3 started up in spring/summer last year, indicating that it may be a bit early for maintenance, especially since the facility was offline during and after Hurricane Laura.
“Feed gas deliveries to Sabine Pass also decreased earlier yesterday morning and may be down for unplanned maintenance, but nothing has been announced,” Rejvani added. “…Activity at Freeport LNG has been variable since Sunday, dropping nearly all of their trains in the morning of May 12. Currently, we are estimating the facility is at around 85% capacity.”
As for the latest weather outlook, Bespoke Weather Services said overall projected gas-weighted degree days in its latest 15-day forecast were “identical” to yesterday’s expectations.
“We do see a little strong warming at the very end of the forecast, which, beyond day 15 could finally give us a wave of more meaningful demand via enhanced” cooling degree days, the firm said. However, “our confidence in medium-range modeling is below average given the recent bias for models to be too warm, likely due to the rising global angular momentum anomaly, which is not yet projected to recede materially.”
June crude oil futures were up 48 cents to $64.30/bbl at around 8:45 a.m. ET, while June RBOB gasoline was up fractionally to $2.0988/gal.
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