As the Gulf Coast braced for the imminent arrival of Hurricane Zeta, and as traders mulled a mixed temperature outlook, natural gas futures hovered close to even early Wednesday. The expiring November Nymex contract was up 1.1 cents to $3.030/MMBtu at around 8:40 a.m. ET; December was off 1.1 cents to $3.300.
Zeta had reached hurricane status and was continuing to strengthen as of 8 a.m. ET Wednesday, according to the National Hurricane Center (NHC). Carrying maximum sustained winds of 90 mph, the storm was about 265 miles southwest of the mouth of the Mississippi River.
“On the forecast track, the center of Zeta will approach the northern Gulf Coast this morning and make landfall in southeastern Louisiana this afternoon,” the NHC said. Additional strengthening was forecast Wednesday morning, and the NHC predicted that Zeta would make landfall as a hurricane.
As of Tuesday, Gulf of Mexico (GOM) operators had shut in about 55% of offshore natural gas production in preparation for Zeta, or about 1.5 Bcf/d, according to the Bureau of Safety and Environmental Enforcement.
Analysts at EBW Analytics Group said Zeta is “unlikely to cause significant damage” to either offshore platforms or liquefied natural gas (LNG) terminals in the region.
Most of the production taken offline “is likely to remain shut in for at least one to two days,” the EBW analysts said. “It is also possible, however, that it will delay the arrival of the next LNG tanker at Cameron LNG. If Cameron is forced to ratchet back feed gas flows, even if briefly, this could more than offset the impact of the lost production, potentially putting downward pressure on prices at Henry Hub.”
Meanwhile, the weather data underwent a mix of changes overnight, according to Bespoke Weather Services, with the firm describing the resulting shift in the outlook as slightly colder overall.
“A sneaky trough swinging through the East early next week again has moved colder, although the warming in the wake of this feature is strong, leading to warmer changes in all of the eastern half of the nation in the back half of next week,” Bespoke said. “The crucial part of the forecast remains what comes as we move toward the middle third of November.”
Bespoke said it “sees signs of an upper level ridge re-developing just off the West Coast extending up toward Alaska” that could signal the arrival of more cold. However, “with no Atlantic blocking in play, any colder turn is likely to be in the western half of the nation, at least initially.”
Looking ahead to Thursday’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 37 Bcf injection for the week ending Oct. 23.
The firm modeled a 4.0 Bcf/d week/week increase in residential/commercial demand on cold temperatures in the Midwest, while LNG feed gas was up an estimated 1.3 Bcf/d week/week for the period.
On the supply side, Energy Aspects modeled a 2.9 Bcf/d increase in Lower 48 production for the period, citing returning GOM output following Delta and “less interrupted Appalachia flows,” among other factors.
NGI’s storage model predicted a 42 Bcf build for the upcoming report. Last year, EIA recorded an 89 Bcf injection for the period, and the five-year average is a build of 67 Bcf.
December crude oil futures were down $1.82 to $37.75/bbl at around 8:40 a.m. ET, while November RBOB gasoline was off about 4.6 cents to $1.0973/gal.
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