After a steep sell-off in the previous session, natural gas futures recovered a large chunk of their recent losses in early trading Thursday on the prospect of further increases in export demand. The November Nymex contract was up 12.9 cents to $2.765/MMBtu at around 8:40 a.m. ET.

NGI Morning Natural Gas Price & Markets Coverage

Analysts at EBW Analytics Group attributed the gains early Thursday to reports that a pipeline force majeure limiting flows into the Sabine Pass liquefied natural gas (LNG) terminal could soon be lifted. The restored pipeline capacity could add 1.5 Bcf/d or more of demand, the firm estimated.

NGPL (aka Natural Gas Pipeline Co. of America) notified shippers Wednesday that a number of locations on its Louisiana Line in Cameron Parish, LA, would be returning to service. NGPL had previously declared a force majeure on the Louisiana Line because of Hurricane Delta.

NGI’s LNG Flow Tracker as of Wednesday showed flows from NGPL into Sabine Pass at zero, leaving the export terminal at 62% capacity utilization, or about 1.4 million Dth/d below its 3.863 million Dth/d operating capacity.

Also factoring into price action Thursday, the Energy Information Administration (EIA) is set to report updated storage data at 10:30 a.m. ET. Prediction for the report, which covers the week ending Oct. 9, have been pointing to much lighter-than-average net injection.

A Wall Street Journal survey of 11 analysts showed predictions ranging from 47 Bcf to 65 Bcf, with an average build of 56 Bcf. A Bloomberg survey of seven market participants had a tighter range of projections, which produced a median of 53 Bcf. Reuters polled 14 analysts, whose estimates ranged from increases of 46 Bcf to 74 Bcf, with a median injection of 55 Bcf. NGI estimated a 54 Bcf injection.

Last year, the EIA recorded a 102 Bcf increase in storage for the similar week, and the five-year average stands at 87 Bcf. Total working gas in storage as of Oct. 2 stood at 3,831 Bcf, which is 444 Bcf higher than last year at that time and 394 Bcf above the five-year average. 

Looking at the latest forecast, weather data maintained milder trends for next week but trended colder for later this month, showing stronger cold moving into northern parts of the country in the Oct. 26-29 time frame, according to NatGasWeather.

Given LNG demand gains coupled with forecasts adding heating demand back to the outlook, “the natural gas markets could want a few cents back after yesterday’s strong selling,” NatGasWeather said. The pattern beyond Oct. 23 is still “subject to large changes in time. But for now, the coming U.S. pattern is cold enough Friday through Monday, a bit too warm” next week, “but back to close to cold enough” toward the end of the month.

There are still reasons for natural gas bulls to remain cautious, according to EBW.

“Calcasieu Channel may stay closed for most of next week,” the EBW analysts said. “Further, while a cold shot is expected starting tomorrow, mild weather is likely to return next week, offsetting the potential increase in feed gas flows at Sabine Pass and keeping cash prices low until the last week of the month.

“Until cash prices rebound, November’s upside potential is likely to be limited, and volatility could remain high.”

November crude oil futures were off $1.45 to $39.59/bbl at around 8:40 a.m. ET, while November RBOB gasoline was down about 4.1 cents to $1.1558/gal.