Absent major changes to the weather outlook, and with the market weighing the balance implications of the latest inventory data, natural gas futures posted modest gains in early trading Friday. The March Nymex contract was up 9.9 cents to $4.585/MMBtu at around 8:50 a.m. ET.
Adjustments to the forecast outlook heading into Friday’s session were “very minor,” according to Bespoke Weather Services.
The firm observed warmer changes based on “the first few days of March looking less cold compared to yesterday, though still on the colder-than-normal side of the spectrum.”
The look of the pattern as of early Friday pointed to colder-than-normal temperatures continuing beyond the 15-day projection period, “even if not extreme,” Bespoke added. However, “we do feel variability returns after the first third of March, as any weakening in the Pacific pattern opens the door to some warmer days, given no help from the Atlantic side in driving this current colder regime.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 190 Bcf withdrawal from domestic storage inventories for the week ending Feb. 11. The print widened the deficit to the five-year average to 251 Bcf, or minus-11.6%, lowering inventories to 1,911 Bcf.
“On a weather-adjusted basis, we estimate the market was about 3.3 Bcf/d undersupplied last week,” analysts at Tudor, Pickering, Holt & Co. (TPH) said of the latest EIA print. “…Adjusted for recent supplies in the 95 Bcf/d range (versus an average last week of 92.8 Bcf/d), the market would be more closely balanced versus norms.”
As for demand, TPH estimates as of Friday showed residential/commercial demand trending milder for the current week, down about 1.5 Bcf/d week/week to 40.6 Bcf/d, lagging the five-year average of 44.4 Bcf/d.
Power generation demand, meanwhile, “has averaged the lowest levels since spring of last year at 26.8 Bcf/d week-to-date,” the TPH analysts said. This is “admittedly in line with the five-year average of 26.6 Bcf/d, but lagging recent trends of outperforming.”
The analysts pointed to recent strength in wind and solar output putting downward pressure on thermal generation’s share of the power stack.
From a technical standpoint, ICAP Technical Analysis analyst Walter Zimmermann identified $4.010 as the key support target for the bulls to preserve.
“Natural gas just rebounded from $3.876 to a $4.793 high,” Zimmermann said. “My near-term focus is on how much more of that gain natural gas can retrace from here. Peg the must-hold for the most bullish case at $4.010 as the .852 retracement of that gain. Below that $3.690 becomes possible.”
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February 18, 2022 at 09:08PM
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Natural Gas Futures Advance Early as Analysts Mull Tight Balances - Natural Gas Intelligence
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