An observed drop in Lower 48 production and strength in global prices helped natural gas futures rebound in early trading Wednesday. After slipping 14.4 cents in the previous session, the October Nymex contract had recovered 7.9 cents to trade at $4.647/MMBtu as of around 8:50 a.m. ET.
The American and European weather models saw “minor” degree day gains overnight, according to NatGasWeather. The back half of the 15-day outlook period continued to look “quite bearish” amid widespread above-normal temperatures.
“This late in the season, above-normal temperatures across the northern U.S. means perfect highs of 70s and 80s,” NatGasWeather said. For days seven through 15 the outlook, the southern United States “will remain very warm to hot…but with coverage of highs of 90s and 100s fading.”
The firm pointed to overnight gains in Dutch Title Transfer Facility (aka TTF) prices as a potential factor behind a bounce in Henry Hub futures.
“What will be closely watched is how long it takes for U.S. production to recover to pre-Hurricane Ida levels near 91.5 Bcf/d since Gulf of Mexico production remains shut in and could remain so with a new tropical wave currently tracking through,” NatGasWeather said. “It’s difficult to project what will be the primary driver of today’s trade, but the focus” will be on whether the October contract finishes above or below the $4.60 mark.
Gulf of Mexico (GOM) production remained at only a fraction of total capacity as of Tuesday, with more than 1.7 Bcf/d of natural gas output, or about 78%, still shut in, according to the Bureau of Safety and Environmental Enforcement.
Separate from the ongoing GOM shut-ins, Wood Mackenzie observed a roughly 1.6 Bcf/d day/day decline in its latest daily pipe production estimate Wednesday. Wood Mackenzie analyst Laura Munder said the firm’s total Lower 48 dry gas production estimate was down to 89.8 Bcf/d Wednesday, noting that declines in the latest data were concentrated in producing regions where maintenance or operational issues are underway.
Munder pointed to sizable day/day supply decreases out of Southwest Pennsylvania, Northeast Pennsylvania, Ohio and the Rockies.
Looking ahead to Thursday’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 39 Bcf build for the week ended Sept. 3.
The upcoming EIA print “will reflect the deepest impacts from Hurricane Ida and industrial weakness from both the storm and maintenance,” the firm said.
NGI is modeling a 38 Bcf build for the report, which would compare with a 65 Bcf injection for both the five-year average and year-ago periods.
October crude oil futures were up $1.02 to $69.37/bbl at around 8:50 a.m. ET.
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