As traders tried to decipher a “murky” outlook for the timing of restored export volumes out of the Gulf Coast, natural gas futures were down several cents in early trading Monday. The November Nymex contract was off 5.0 cents to $2.723/MMBtu at around 8:50 a.m. ET.
Analysts at EBW Analytics Group attributed heavy selling in after-hours trading Friday to reports that clearing a sunken barge obstructing the Calcasieu Ship Channel could take three to four weeks, news that put a damper on the outlook for liquefied natural gas (LNG) exports out of the Cameron LNG terminal.
“This morning, however, Cameron has ramped up feed gas flows to 0.8 Bcf/d, creating optimism LNG tankers will soon arrive,” the EBW analysts said. “Separately, an obstruction at Sabine Pass should be cleared later today, allowing feed gas flows to return to normal there.”
However, it’s far from smooth sailing from here for natural gas bulls, according to the firm.
“The situation at Cameron remains murky, and production rebounded further over the weekend,” the analysts said. “At least for today, though, natural gas is likely to be able to hold its ground.”
Meanwhile, the latest weather data exiting the weekend offered up a “complicated” picture, Bespoke Weather Services told clients early Monday.
“Our lean was a little to the warmer, lower demand side on Friday, and that looked reasonable for much of the weekend, as we did see warmer changes in the modeling initially, but the last couple of cycles have reverted back colder,” Bespoke said. “Adding more chaos to the mix are hints of a warmer pattern finally setting up into early November.
“This warming has been pushed back, however, so we are forced to keep confidence below average until there is some consistency.”
Bespoke said the market “no longer seems concerned” about the situation at Cameron LNG despite seemingly nothing changing regarding the timeline for clearing the channel.
“Production moved higher over the weekend, back to the highest levels seen since early September, but still 7.0 Bcf/d under last year,” the firm said. “…We hold neutral as of right now.”
From a technical standpoint, analyst Brian LaRose said ICAP Technical Analysis would be shifting its focus to support for the November contract to start the week.
“Peg $2.662-2.646-2.639 as the band that will have our attention,” LaRose said. “Carve out a bottom from this vicinity and an immediate slingshot back towards the highs will be possible.”
Should support at this resistance band fail, the next support targets would be down to $2.595 and then to $2.512-2.507-2.498, according to LaRose.
November crude oil futures were down 11 cents to $40.77/bbl at around 8:50 a.m. ET, while November RBOB gasoline was down fractionally to $1.1596/gal.
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October 19, 2020 at 08:08PM
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Natural Gas Futures Called Lower Amid 'Complicated' Forecast, Unclear Outlook for Cameron LNG - Natural Gas Intelligence
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