Natural gas futures advanced early Thursday as traders contemplated potential energy impacts of tropical weather expected to target the Gulf Coast by next week. The September Nymex contract was up 6.3 cents to $3.960/MMBtu as of around 8:50 a.m. ET. October was up 6.9 cents to $3.994.
The National Hurricane Center (NHC) as of early Thursday was monitoring a disturbance in the west-central Caribbean that it said had a 90% chance of cyclone formation over the next 48 hours, potentially threatening coastal states along the Gulf of Mexico over the weekend.
“The system is expected to enter into the Gulf of Mexico Friday night and continue moving northwestward toward the central or northwestern U.S. Gulf Coast, potentially bringing dangerous impacts from storm surge, wind and heavy rainfall to portions of the coasts of Texas, Louisiana, Mississippi, Alabama and the Florida Panhandle by Sunday and Monday,” forecasters said.
The NHC said the exact path and strength of the storm remained highly uncertain given the system was in the early stages of development.
Meanwhile, traders were also awaiting the Energy Information Administration’s (EIA) 10:30 a.m. ET storage report, expected to show a net weekly injection into U.S. stocks in the upper 30s to low 40s Bcf, according to surveys.
Twelve injection estimates submitted to Bloomberg as of early Thursday ranged from 35 Bcf to 44 Bcf, with a median of 39 Bcf. A Reuters poll found a similar span of estimates and also landed at a median of 39 Bcf. A Wall Street Journal survey found estimates from 38 Bcf to 44 Bcf and an average of 41 Bcf.
NGI estimated a build of 37 Bcf for the report, which covers the week ended Aug. 20. That would compare with a 45 Bcf increase a year earlier and a five-year average build of 44 Bcf.
“It’s a tricky build to predict due to cooler week/week temperatures but with much lighter week/week winds,” NatGasWeather said of this week’s EIA print. “We expect a build of 41-42 Bcf but with the potential it misses lower.”
As for the overnight weather data, the firm observed cooling degree day losses from both the American and European models, with cooler temperatures now expected next week as tropical weather looms over the Gulf Coast. Temperatures in the outlook remained “hot and bullish” through this weekend before national natural gas demand is seen receding to “much lighter” levels by next week.
“Impacts from the tropical cyclone are likely to be more bearish than bullish” with liquefied natural gas (LNG) export facilities sitting in the storm’s path, creating “the potential to drop LNG feed gas by a few Bcf/d,” NatGasWeather said.
The anticipated tropical cyclone “could wreak havoc by bringing widespread power outages, storm surge and flooding rains, thereby killing demand but also potentially production” given the “greater concentration of oil and gas refineries and pipelines along the Texas and Louisiana coasts,” the firm added.
In terms of technicals, prices on the October contract will need to climb soon to prove there’s still more upside, according to ICAP Technical Analysis analyst Brian LaRose.
“So far, support has held across the globe,” LaRose told clients. “To derail the case for peaking action and revitalize the up trend bulls must promptly lift Henry Hub natural gas over the $4.205/4.211 highs. Still see the potential for a push to the $4.386 vicinity, perhaps higher, if the bulls can get the job done.
“And if they can not? Bears could get another go at support and a chance to do more serious damage.”
October Nymex crude oil futures were down 66 cents to $67.70/bbl at around 8:50 a.m. ET.
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August 26, 2021 at 08:09PM
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Tropical Cyclone Brewing, Threatening GOM Interests as Natural Gas Futures Rise - Natural Gas Intelligence
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