Chillier trends in the latest forecasts saw natural gas futures swing back higher in early trading Friday, continuing a week of whipsaw price action. After plunging 29.3 cents in the previous session, the December Nymex contract was up 25.5 cents to $6.230/MMBtu at around 8:45 a.m. ET.
Early price gains Friday followed colder overnight trends from both the American and European weather models, according to NatGasWeather.
“Where the pattern is finally cold enough is Nov. 12-17 as subfreezing air over the West and Plains releases and spreads eastward across the Ohio Valley and Northeast,” the firm said. “However, the weather data is struggling to determine exactly how much subfreezing air will ultimately spread across the Great Lakes and Ohio Valley.”
The American model is “more aggressive” with cold pushing east compared to its European counterpart, according to the firm.
Going into the weekend, the market is likely to closely watch how forecasts shape up for the Nov. 18-22 period, NatGasWeather said.
Should models maintain colder temperatures over the northern Lower 48 during this time frame, “it’s likely to be applauded at the Sunday reopen,” the firm said. “However, if the weather data shows a warm/bearish pattern returning Nov. 18-22, this will likely lead to disappointment/selling. Clearly, a dangerous weekend to hold depending on weekend weather trends.”
Meanwhile, on Thursday the Energy Information Administration (EIA) reported a 107 Bcf injection into U.S. natural gas storage for the week ended Oct. 28. The build lifted inventories to 3,501 Bcf and shrank the deficit to the five-year average to 135 Bcf (minus 3.7%), EIA data show.
“Compared to degree days and normal seasonality, this week’s injection appears loose by 5 Bcf/d versus the prior five-year average,” Wood Mackenzie analyst Eric Fell said of the latest EIA data.
An increase in generation from nuclear and renewable sources contributed to the looseness in the print, according to the analyst.
“Over the last seven weeks we have injected close to 200 Bcf more than the five-year average despite the fact that total degree days were slightly higher than average over that time frame,” Fell said. “…On a weather-adjusted basis, the last five weeks have appeared loose by an average of around 5 Bcf/d, which is comparable to the extreme looseness we saw in April 2020 during peak Covid impacts.”
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November 04, 2022 at 08:02PM
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Weather Models Colder Overnight as Natural Gas Futures Rally Early - Natural Gas Intelligence
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