Natural gas futures faltered on Tuesday, snapping a furious two-day rally as Tropical Storm Nicole gathered strength, approached Florida and threatened to evolve into a demand-destroying hurricane this week.
At A Glance:
- Tropical Storm Nicole packs fierce winds
- Production holds steady early this month
- Analysts anticipate robust storage build
Following a 54.4-cent surge in the previous session, the December Nymex gas futures contract settled at $6.138 on Tuesday, down 80.6 cents day/day. January dropped 72.0 cents to $6.524.
NGI’s Spot Gas National Avg. followed suit, shedding 25.0 cents to $3.930.
Production on Tuesday held steady around 99 Bcf/d, as it has for much of November, down from October’s record highs above 101 Bcf/d. Weather forecasts, meanwhile, point to widespread cold by mid-November, a development that could usher in the first strong dose of heating demand. The favorable fundamentals had fueled a rally late last week and into Monday, but a potential late-season hurricane slammed the brakes on the bulls’ momentum.
The National Hurricane Center (NHC) said Tuesday it was tracking Tropical Storm Nicole, a system churning east of the Bahamas and on track to approach Florida’s east coast late Wednesday before moving over central and northern Florida. Nicole was expected to reach southern Georgia Thursday, NHC meteorologists said.
“Hurricane conditions are possible across portions of the coast of southeast and east-central Florida beginning late Wednesday or Wednesday night, where a Hurricane Watch is in effect,” they said.
NHC warned against focusing on the forecast track given that Nicole “is expected to be a large storm with hazards extending well to the north of the center, outside of the forecast cone. These hazards are likely to affect much of the Florida peninsula and portions of the southeast U.S.”
The storm is expected to deliver chilling air, in addition to the range of hazards inherent in any major weather system, erasing cooling demand in the Southeast, while temperatures elsewhere were forecast to prove largely benign until late this week.
Still, a forecast shift toward more widespread wintry conditions beginning this weekend could bring about fresh bullish price sentiment.
“Mild weather is keeping U.S. gas markets in equilibrium, but winter nears and cold weather threatens to blanket markets as we get deeper into November,” Rystad Energy analyst Emily McClain said.
Winter, Freeport Wildcards
“Nearly all regions, except for the Pacific, are forecast to experience below-normal temperatures” at times in the second half of November, McClain added. “As such, we expect increases in demand from the residential and commercial sectors via heating to provide support for Lower 48 demand as we move into winter.”
However, she said, the market may require an extended cold snap and a return of Freeport LNG operations this month to sustain any November traction. The Freeport liquefied natural gas facility, offline since a June fire, had been slated to return to service this month. But it has yet to secure all regulatory approvals and analysts are dubious about the timing of its relaunch.
That noted, should Freeport come back online around the time freezing air settles in, McClain said, it would boost export demand just as domestic consumption ramps up. This could necessitate a bump up in production from current levels to ensure adequate supplies through winter, she said.
“U.S. consumption will rise as temperatures drop and heating demand surges, but increased LNG exports with the Freeport LNG facility coming back online will tighten the supply outlook significantly,” McClain said.
In the meantime, though, two more robust storage injection reports are expected from the Energy Information Administration (EIA). McClain noted inventories rebounded from 52 Bcf to 107 Bcf in the last week of October, a 70% increase from the same week last year.
“We expect storage injections to continue in early November, driven by lingering mild temperatures and lower power demand,” McClain said. She added that Rystad expects stockpiles to crest just above 3.6 Tcf, “sufficient for a normal winter.” But “if a colder-than-average winter materializes, the storage trajectory will change significantly, leading to sizable withdrawals and pushing prices higher.”
Analysts are looking for another stout increase with this Thursday’s inventory report. Early estimates established a wide range from the 60s Bcf on up to triple digits for the week ended Nov. 4. NGI estimated a build of 68 Bcf. Even at the lower end, the coming print would easily eclipse the five-year average of 20 Bcf.
Spot Prices Weaken
Next-day cash prices pulled back on Tuesday after big gains the day before. Mild near-term weather and storm activity in the Southeast combined to pave a wide path for bears to roam.
National Weather Service (NWS) data showed that, aside from Florida and parts of neighboring states, the eastern half of the Lower 48 would remain warmer than normal through the current trading week. Highs in the 60s and 70s were forecast for large swaths of the country, leaving conditions conducive to neither heating or cooling demand.
Conditions were also mild in the West on Tuesday, and price drops there drove the national average lower.
SoCal Citygate lost $1.200 day/day to average $8.085, while SoCal Border Avg. dropped $1.440 to $6.970 and PG&E Citygate fell 76.0 cents to $8.375.
The Southeast regional prices also declined, led lower by Florida Gas Zone 3, down 46.5 cents to $3.680, and Transco Zone 4, off 46.5 cents to $3.695.
A hurricane warning was issued along the central part of Florida’s east coast on Tuesday. Florida’s governor also declared a state of emergency in anticipation of Nicole.
AccuWeather meteorologists said Nicole was expected to strengthen into a hurricane prior to making landfall early Thursday. In addition to storm surges and flooding, they added, risks of severe thunderstorms and tornadoes are elevated.
AccuWeather also anticipated significant impacts along the Georgia and Carolina coasts, southeastern Virginia and southeastern Massachusetts. “The tropical-storm-force winds will extend over a large area – much larger than a standard tropical storm,” AccuWeather Director of Forecasting Operations Dan DePodwin said.
“In coastal areas, especially from the Space Coast of Florida through the Carolinas, tropical-storm-force wind gusts can occur for 36-48 hours straight,” DePodwin added. “This is a longer duration than typical tropical systems.”
"gas" - Google News
November 09, 2022 at 05:41AM
https://ift.tt/OgBGSqe
Natural Gas Futures, Cash Prices Fizzle as Potential Hurricane Barrels Toward Florida, Ending Rally - Natural Gas Intelligence
"gas" - Google News
https://ift.tt/1KPMHdE
https://ift.tt/IY87Cbq
Bagikan Berita Ini
0 Response to "Natural Gas Futures, Cash Prices Fizzle as Potential Hurricane Barrels Toward Florida, Ending Rally - Natural Gas Intelligence"
Post a Comment