Warmer overnight forecast trends and the prospect of a delayed return to service for a major U.S. export terminal weighed on natural gas futures in early trading Wednesday. The December Nymex contract was off 15.9 cents to $5.875/MMBtu at around 8:45 a.m. ET.
Weather data trended warmer overnight, with both the American and European models dropping heating degree days on milder trends during the Nov. 24-29 time frame, according to NatGasWeather.
“No changes to the timing of swings in national demand, with very strong national demand the next seven days,” the firm said. “…As a result of widespread subfreezing temperatures, the first wellhead freeze-offs of the season are in the process of dropping U.S. production by 2 Bcf/d.”
Models have struggled to determine how much cold air will linger over the Lower 48 into the last week of November, NatGasWeather said.
“After colder trends yesterday for Nov. 23-30, the overnight data trended back warmer by favoring subfreezing air retreating to Canada besides portions of New England,” the firm said.
This would result in widespread comfortable high temperatures and lighter demand nationally, the firm added.
The timing of the 2.0 Bcf/d Freeport LNG terminal’s return to service has also grabbed the market’s focus recently, with the prospect of potential delay into 2023 hampering the export demand outlook.
“Freeport LNG is likely extending the ongoing outage until 2023 as buyers have been informed to cancel shipments scheduled for November and December due to regulatory and repair delays,” Tudor, Pickering, Holt & Co. analysts said in a note to clients Wednesday.
EBW Analytics Group analyst Eli Rubin observed that the expectation of a delayed restart for the Texas liquefied natural gas export terminal “has sapped any nascent bullish momentum from substantial near-term cold.”
“Chances for steep upside during December may be greater than recognized — but it could require renewed post-Thanksgiving cold to refocus the market on upside risks,” Rubin said.
Meanwhile, looking ahead to this week’s Energy Information Administration (EIA) storage report, the median of seven estimates submitted to Bloomberg as of early Wednesday was a 65 Bcf injection for the week ended Nov. 11. Injection predictions ranged from 50 Bcf to 72 Bcf.
EIA recorded a 23 Bcf injection for the year-earlier period, while the five-year average is a 5 Bcf withdrawal.
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November 16, 2022 at 09:04PM
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Models Trend Warmer for Late November as Natural Gas Futures Slide Early - Natural Gas Intelligence
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