Hotter overnight trends in the weather data helped natural gas futures to rebound sharply in early trading Friday, with prices continuing upward after a strong finish to the previous session. The September Nymex contract was up 9.1 cents to $3.921/MMBtu at around 8:50 a.m. ET.
The European weather model overnight added a “hefty” 10 cooling degree days (CDD) to its temperature projections for next week through the end of August, according to NatGasWeather.
The model “remained quite hot versus normal for next week but still favors national demand easing to lighter levels after,” NatGasWeather said.
However, the latest run slowed the transition to lighter demand by one to two days, with the pattern now not expected to switch “from bullish to neutral/slightly bearish” until Aug. 28, according to the firm.
“Gains yesterday were likely initially due to an oversold bounce after front month prices plunged 50 cents in 10 sessions,” NatGasWeather said. “But after the overnight European model gained 10 CDD, this has pushed prices a few cents higher.”
A drop in Dutch Title Transfer Facility, aka TTF, prices Thursday may have also contributed to the initial move lower, “as global price moves at times carry over to the U.S., although inconsistently,” the firm added.
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 46 Bcf injection into Lower 48 gas stocks for the week ending Aug. 13, much larger than surveys had predicted. The figure included a 4 Bcf reclassification in the South Central region.
Total working gas in storage reached 2,822 Bcf for the period, 547 Bcf below year-ago levels and 174 Bcf below the five-year average, according to EIA.
The reported build was in line with the five-year average. It also did “little to dissuade Henry Hub” as prices rallied to close out the day following the EIA release, analysts at Tudor, Pickering, Holt & Co. (TPH) said in a note to clients early Friday.
“Following this week’s reclassification, South Central region inventories now sit 6% below the five-year average, and all regions are now firmly in deficit territory following a flip in Mountain region inventories to below the five-year in late July,” the TPH analysts noted.
Looking ahead, total Lower 48 power generation has “tapered off” since reaching 13.8 TWh last week, the highest in TPH’s dataset going back to 2019. Total generation for the current week is averaging 12.4 TWh, in line with last month’s average.
Thermal generation has seen its share of the stack sit at 66%, “down from nearly 69% in late July, and wind and solar has normalized to around 8% of the stack from a peak of 13% last week,” the TPH analysts said. “For next week, our preliminary modeling points towards a 42 Bcf build versus the five-year average of 43 Bcf as power generation has trended weaker week-to-date from prior summertime highs.”
September crude oil futures were off $1.25 to $62.25/bbl as of around 8:50 a.m. ET.
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August 20, 2021 at 08:10PM
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'Hefty' Demand Gains Seen from Euro Model as Natural Gas Futures Rally Early - Natural Gas Intelligence
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