With the natural gas markets continuing to mull the potential impacts from the coronavirus outbreak, prices were trading close to even early Tuesday. The May Nymex contract was off 0.3 cents to $1.687/MMBtu at around 8:45 a.m. ET.

As the coronavirus pandemic hangs over the global economy, the natural gas markets have had to weigh recent developments that could have major impacts on both supply and demand.

“The natural gas market is in an interesting and unpredictable time right now,” analysts at Enverus said. On one hand the collapse in crude oil prices and the resulting capital expenditure cuts “will lead to less associated natural gas supply. On the other hand, the Covid-19 pandemic has tens of millions of Americans under stay-at-home orders, so many businesses and industrial facilities are closed.

“Ultimately, people staying at home will lead to less natural gas demand in the commercial and industrial sectors. As we are in shoulder season, demand is already low, as it’s too warm for residential heating but too cold for power burn demand.”

While the “real impact on demand” from the contagion is not yet clear, a sharp drop-off in the rig count has already materialized, according to Enverus estimates. Between March 17 and this past Sunday, the firm’s Lower 48 rig count fell from 802 to 719, an indication that “operators’ less ambitious plans are already making headway.”

Meanwhile, the overnight forecasts extended recent milder trends, with both the American and European models showing less cold air finding its way into the northern part of the country this weekend and next week, according to NatGasWeather.

“There will still be weak cool shots into the northern U.S. through mid-April, just with limited amounts of subfreezing air,” the forecaster said. “The southern U.S. is expected to be quite comfortable going forward, with highs of upper 60s to 80s, nearly ideal for early spring, although it could get a touch hot late next week as 90s increase in coverage.

“Most importantly, the coming pattern just isn’t hot or cold enough to intimidate, especially after a little further milder/bearish trends overnight.” But gains for prices in overnight trading suggested “other factors are more strongly in play than weather.”

With weather over the next 10 days unlikely to provide much support, this could “compound bearish weight on demand” exerted by Covid-19, according to Genscape Inc.

The firm’s meteorologists as of Tuesday were calling for Lower 48 heating degree days (HDD) to begin “declining/warming at a fairly sharp rate” later this week.

“By the weekend, HDD are forecast to fall to just 3 HDD, about 60% warmer than seasonal,” Genscape senior natural gas analyst Rick Margolin said. “Some of the bearishness of national weather may be modestly offset by abnormally hot weather from Texas to the Georgia Atlantic coast triggering cooling loads, but not enough to stem a total decline in aggregate demand.”

May crude oil futures were up 82 cents to $20.91/bbl at around 8:45 a.m. ET, while April RBOB gasoline was up about 1.3 cents to about 58.8 cents/gal.