After some up-and-down action for a market that’s been closely monitoring global prices trends, natural gas futures were trading close to even early Monday. The October Nymex contract was up 0.4 cents to $5.109/MMBtu at around 8:50 a.m. ET. Forecast weather-driven demand trended lower over the weekend, a result of declines in both projected cooling degree days (CDD) and heating degree days (HDD) in the 15-day outlook period, according to Bespoke Weather Services.
There was a “mix of changes in the modeling” compared to Friday’s forecast, “the first being some cooler changes in the South later this week, reducing CDD,” Bespoke said. “A second push of cooler air comes through the eastern U.S. this weekend, though as we head into next week, warmth builds in the middle of the U.S., resulting in a pattern that favors below normal HDD as we head into the start of October.”
The below-normal heating demand for early October would occur “as HDD overtake CDD in terms of significance to the natural gas market,” the firm added.
Meanwhile, liquefied natural gas (LNG) feed gas flows were down 0.5 Bcf/d early Monday amid planned maintenance at the Cove Point LNG facility in Maryland, analysts at EBW Analytics Group said.
“Gulf Coast demand, however, is up 1.7 Bcf/d from late last week as Freeport recovers from an unplanned outage,” the EBW analysts said. “Opaque industrial demand may similarly be recovering higher in the wake of Hurricanes Ida and Nicholas.
“Weather-driven demand for natural gas could slip as cooling demand halves by Thursday, however, while shut-in Gulf of Mexico supply trickles back and technical analysis suggests deeper tests of support,” the EBW team continued. “Continued price weakness may be likely later this week.”
Henry Hub prices have recently shown a tendency to “simply follow whatever the trend is in European prices,” Bespoke said, with the intercontinental connection likely reflecting speculation over the possibility of the market needing to price out U.S. LNG exports this winter.
However, “at some point, one would think our prices here in the U.S. can move according to changes in fundamentals, and soon enough, changes in weather forecasts,” Bespoke said. “At this stage, we are at a point where we will need some cold in winter to justify current prices, but it remains early to focus on weather, especially with our market just blindly following trends in European prices.”
Looking ahead to Thursday’s U.S. Energy Information Administration storage report, NGI’s model is calling for an 82 Bcf injection into natural gas stocks for the week ended Sept. 17. Such a build would come in slightly above historical norms.
Last year, EIA recorded a 70 Bcf injection for the similar week, and the five-year average injection is 74 Bcf.
Nymex October crude oil futures were down $1.35 to $70.47/bbl at around 8:50 a.m. ET.