Soft shoulder-season fundamentals, and the prospect of a sizable storage build this week, helped send natural gas futures lower in early trading Wednesday, with the front month paring gains from the prior day’s trading.
After rallying 36.7 cents on Tuesday, the November Nymex contract was off 4.7 cents to $6.790/MMBtu at around 8:50 a.m. ET.
While futures rallied in part Tuesday on support from updated estimates showing a decline in production, prices in the physical market remained “very weak,” EBW Analytics Group senior analyst Eli Rubin observed.
“Daily heating demand may bottom out on Thursday…before more than doubling” heading into the weekend, Rubin said. This could help support “a flagging physical market. Still, the combination of ongoing LNG outages at Cove Point and Sabine Pass, record gas production, and soft shoulder-season demand is a recipe for gigantic storage builds.”
Based on estimates submitted to Bloomberg as of early Wednesday, expectations are centered around a triple-digit injection for this week’s Energy Information Administration (EIA) storage report, which covers net changes to U.S. natural gas stocks during the week ended Sept. 30.
The median of seven estimates was an injection of 125 Bcf, with predicted injections ranging from 95 Bcf to 129 Bcf.
In the year-earlier period, EIA recorded an injection of 114 Bcf, while the five-year average is a build of 87 Bcf.
Meanwhile, looking at the latest weather outlook, the updated forecast from Maxar’s Weather Desk showed “seasonal to cool” temperatures blanketing the eastern half of the Lower 48 during the 11- to 15-day period, from Oct. 15-19.
“Above normal temperatures favor the West, while the Eastern Half is near normal to below normal,” the forecaster said. Still, “models are less pronounced with a trough over parts of the Eastern Half, which could point to continued variability in the region.”
For the six- to 10-day period, running from next Monday through Oct. 14, Maxar observed “mixed and small” changes in the forecast for the eastern Lower 48, with the pattern remaining “variable” for the region.
“High pressure has below normal temperatures being in the East early and the Midwest late, while between these cooler pushes are aboves from early to mid-period” in the central Lower 48 “and on day nine in the East,” Maxar said.
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October 05, 2022 at 08:09PM
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Triple-Digit Build Expected as Natural Gas Futures Pare Gains Early - Natural Gas Intelligence
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