Forecasts showing more summer-like temperatures lingering across parts of the Lower 48 over the next week or so helped lift natural gas futures in early trading Tuesday. The October Nymex contract was up 2.0 cents to $2.547/MMBtu at around 8:40 a.m. ET.
In its updated forecast Tuesday, Maxar’s Weather Desk projected near record heat in the South for late this weekend into next week, part of what it described as “a highly amplified pattern.” During this time frame, the forecaster noted hotter trends for the southern Midwest in its latest outlook, with few changes elsewhere.
“Below and much below normal temperatures are along the West Coast and in the far northern Rockies, while much and strong above normal temperatures are widespread across the Eastern Half,” Maxar said. “Temperatures are forecast near daily records in parts of the South, and 90s also press into the Mid-Atlantic on Day 9 as ridging peaks overhead.
“Unsettled conditions in the Midwest separate the cooler West from the warmer East, and this region is lower confidence versus elsewhere.”
Further out, from Oct. 4-8, Maxar said the overall themes remained the same in its latest forecast, including a round of below normal temperatures through the Midwest and East early in the period. The eastern half of the Lower 48 “leans on the warm side of normal overall, especially in the South where aboves to much aboves hold steady coverage.”
The expiration of the October contract could overshadow weather and fundamentals in terms of determining the direction of prices this week, according to NatGasWeather. The forecaster viewed the guidance as hotter trending overnight, pointing to strong high pressure lasting longer over the South and East from Oct. 2-6.
“The data also held hotter trends for this weekend and into the start of next week but didn’t trend any further hotter with it compared to Monday’s data,” NatGasWeather said. “If the natural gas markets wanted to use hotter trends as a reason for gains, they certainly could.” The markets “didn’t react to added demand over the weekend break,” but “they could still do so today. But again, other factors could prove more important, including repositioning ahead of options and futures expiration Wednesday and Thursday.”
Looking at balances, last week’s bearish miss from the Energy Information Administration’s (EIA) storage report may have been a symptom of weaker than expected gas demand in the power sector, according to Energy Aspects.
“There were mixed signals for generation overall” during the most recent report period “as total electricity demand was close to unchanged, with coal and wind rising to offset lower nuclear output and some signals of gas-to-coal switching,” the firm said.
As for this week’s EIA report, Energy Aspects issued a preliminary estimate for an 89 Bcf injection. The higher build reflects a 1.7 Bcf/d week/week decline in power burns, according to the firm.
November crude oil futures were off 64 cents to $58.00/bbl as of 8:40 a.m. ET, while October RBOB gasoline was trading about 1.8 cents lower at $1.6656/gal.
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