Natural gas futures eased lower in early trading Wednesday as the market continued to weigh supportive March cold against a comfortable inventory cushion at this point in the season. The April Nymex contract was off 4.6 cents to $2.527/MMBtu at around 8:45 a.m. ET.
Overnight forecast trends were mixed in terms of degree day adjustments, though the overall outlook for national weather-driven demand trends over the next 15 days remained intact, according to NatGasWeather.
Featuring cooler than normal temperatures for mid to late March, the weather models remained “slightly to moderately bullish the next 15 days, and if prices fail to rally in this environment, it could prove problematic for the bullish case,” NatGasWeather said.
Updated forecasts from Maxar’s Weather Desk Wednesday showed below-normal temperatures covering much of the country throughout the 15-day projection period.
“Below and much below normal temperatures are widespread in coverage from early to mid-period, with the forecast trending additionally colder…in the South and East,” Maxar said of the latest six- to 10-day forecast.
The 11- to 15-day forecast remained “mostly similar” to previous expectations, continuing to advertise below normal conditions over the western Lower 48, according to the forecaster.
“Above normal coverage is limited to the East Coast at the start of the period,” Maxar said. “As low pressure passes, the East Coast also cools toward normal or slightly below normal levels during the second half.
“…The forecast remains on the warm side of the models in the Eastern Half, making some account for their cold biases observed over the past several weeks.”
Looking ahead to Thursday’s Energy Information Administration (EIA) storage report, the median of six estimates submitted to Bloomberg as of early Wednesday was a 63 Bcf withdrawal for the week ended March 10. NGI modeled a 64 Bcf withdrawal.
That would compare with a five-year average 77 Bcf pull and a year-earlier withdrawal of 86 Bcf.
“If production were to drop and hold under 100 Bcf/d, and if Freeport LNG were to resume full operations soon, a tighter balance and below normal temperatures will have an opportunity to chip away at currently healthy surpluses,” NatGasWeather said.
Total Lower 48 storage stood at 2,030 Bcf as of March 3, a 359 Bcf surplus to the five-year average, according to EIA.
With production “still quite strong,” it would likely require “prolonged cold for much of April if surpluses are to drop under 200 Bcf,” NatGasWeather said. “To that point, the background state is relatively bearish.”
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March 15, 2023 at 08:06PM
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Natural Gas Futures Slide Early as Storage Cushion Seen Keeping Background State Bearish - Natural Gas Intelligence
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