Despite forecasts showing July heat easing compared to previous expectations, natural gas futures advanced in early trading Wednesday as analysts continued to see tightness in the supply/demand balance. The August Nymex contract was up 3.0 cents to $3.726/MMBtu at around 8:50 a.m. ET.
Natural gas prices were “jumpy” in early trading Wednesday, with the August contract “bouncing around a little on either side of the $3.70 level,” Bespoke Weather Services said in a note to clients.
The firm pointed to data showing lower production day/day, with output down to slightly below 90 Bcf/d. Liquefied natural gas feed gas volumes, meanwhile, were back up to 11 Bcf/d in the latest daily estimate, according to the firm.
The supply/demand balance “still is not weakening enough to alleviate storage concerns, and likely will not do so until production rises at least to new 2021 highs, in our view,” Bespoke said.
As for the latest weather outlook as of early Wednesday, NatGasWeather noted an increase of 3 cooling degree days (CDD) from the American Global Forecast System (GFS) overnight, with the European model losing around 2-3 CDD.
“This makes the European model cooler than the GFS by numerous CDD,” particularly during the period starting Sunday and running through July 25, when the European dataset favors “stronger cooling over the East,” NatGasWeather said.
The models show temperatures remaining “hot enough” during the current week, including highs of 90s for major cities along the East Coast south of New York City, according to the firm. However, by this weekend and into next week national demand is expected to pull back to “more seasonal levels.”
Models “still maintain a hotter pattern returning going into the last week of July, although this has been delayed by one to two days in recent data due to cooler trends,” NatGasWeather said. “In addition, the overnight European model also wasn’t quite as hot over the East July 23-26 compared to the hotter GFS. This is an important difference that needs resolving since the European would be closer to seasonal July 18-26 instead of more solidly bullish like it had been.”
Bespoke’s updated forecast showed an extension of cooler trends from the previous day, with the firm noting that it dropped 1.5 gas-weighted degree days compared to Tuesday afternoon’s projections.
“We continue to see a general lack of heat in the pattern compared to what was expected previously, with the 15-day period, along with July as a whole, looking to come in easily cooler than the five- and 10-year normal,” Bespoke said. “Best heat in the pattern lies from the northern Plains back into the interior West, though even in the West, the upcoming heat is nothing like what has been seen out there in previous weeks.”
August Nymex crude oil futures were virtually unchanged at $75.26/bbl at around 8:50 a.m. ET.
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July 14, 2021 at 08:08PM
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Natural Gas Futures 'Jumpy' Early as Balances Said Tight; Forecasts Trend Cooler - Natural Gas Intelligence
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