Natural gas futures were virtually unchanged in early trading Tuesday as forecasters continued to expect intense heat in the current week to ease later this month. The September Nymex contract was up 0.4 cents to $4.064/MMBtu as of around 8:45 a.m. ET.
With some days in the 15-day window shifting slightly hotter and others slightly cooler, projections from both the American and European weather models remained largely unchanged overall after their overnight runs, according to NatGasWeather.
“This keeps the front six days of the 15-day forecast solidly hot/bullish as highs of 90s to 100s rule most of the U.S., including 90s over the East Coast and 90s and 100s across the Northwest,” the firm said early Tuesday. “However, national demand is still expected to ease…to near or only slightly stronger than normal” beginning this weekend and continuing through Aug. 23.
This means that “after this week plays out as one of the hottest this summer, the pattern after will be only neutral to slightly bullish, and while heat this week is impressive, it might not result in the smallest build of the year due to strong wind energy generation over Texas and the Plains that’s preventing power burns from reaching more impressive levels,” NatGasWeather added.
Meanwhile, looking ahead to this week’s Energy Information Administration (EIA) storage report, NGI is modeling a 53 Bcf injection for the week ended Aug. 6. That would compare with a 55 Bcf build in the year-ago period and a five-year average injection of 42 Bcf.
Energy Aspects issued a preliminary estimate for a 46 Bcf injection for the upcoming report. The firm pointed to a nearly 5 Bcf/d week/week decrease in power burns, maintenance at the Cameron liquefied natural gas (LNG) facility and lower flows to Mexico as factors likely to drive a higher injection rate for this week’s report.
Energy Aspects said its projected end-of-injection season carryout number is “now slipping” toward 3.50 Tcf.
“That carryout between 3.50-3.55 Tcf has been nearly unflappable over the course of the summer as we have previously raised prices to keep stocks near that thinly balanced end-of-season estimate,” the firm said in a recent note to clients.
However, given the strength of recent prices in both the physical and futures markets “price is treading into the territory where much switching capacity will soon be exhausted,” Energy Aspects added. “However, we must caveat that the scale of switching at $4 on a normal September or October day is far different than what is available in peak cooling season.”
This suggests gas could still see its share of thermal generation decline as power demand eases in the shoulder season, according to the firm.
September crude oil futures were up 76 cents to $67.24/bbl at around 8:45 a.m. ET.
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August 10, 2021 at 08:02PM
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Heat Seen Easing After This Week as Natural Gas Futures Called Near Even Early - Natural Gas Intelligence
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