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Natural Gas Futures Slightly Lower Early as Market Not Impressed by March Chills - Natural Gas Intelligence

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Natural gas futures were trading a penny or so shy of unchanged early Friday as a chilly March forecast failed to impress when set against a backdrop of ample storage and loose underlying balances.

NGI Morning Natural Gas Price & Markets Coverage

The April Nymex contract was down 1.1 cents to $2.532/MMBtu at around 8:40 a.m. ET.

The Energy Information Administration (EIA) on Thursday reported an 84 Bcf withdrawal from U.S. natural gas storage facilities for the week ending March 3, on the tighter side of the range of pre-report expectations. However, the print was lighter than the five-year average 101 Bcf pull.

Total Lower 48 working gas in underground storage stood at 2,030 Bcf as of March 3, a 359 Bcf (plus 21.5%) surplus to the five-year average, according to EIA.

“On a weather-adjusted basis, we estimate the market was 3 Bcf/d oversupplied after tracking 2 Bcf/d oversupplied the week prior,” analysts at Tudor, Pickering, Holt & Co. (TPH) said following the latest EIA report. This is “despite what we’d characterize as a fairly weather-neutral dynamic in coal-to-gas switching having incentivized roughly 2-2.5 Bcf/d of incremental demand over the course of the past couple weeks.”

This means that even with natural gas gaining in the power stack, the market has remained 2-3 Bcf/d oversupplied the past two weeks on a weather-neutral basis, the TPH analysts said.

Recent price action suggests the market requires a tighter supply/demand balance and “more intense cold” from forecasts if Nymex futures are to retest the $3 mark, according to NatGasWeather. 

A “relatively bullish” upcoming weather pattern and the imminent return to full service of the Freeport LNG terminal were proving insufficient to stir bullish sentiment early Friday, the firm said.

Weather data trended somewhat colder overnight, including heating degree day gains from both the American and European models, according to NatGasWeather.

“National demand will increase to stronger levels early next week as a rather cold weather system sweeps across the country, including relatively deep into the southern U.S.,” the firm said. “A warmer-trending break between cold shots held for late next week over the southern and eastern U.S. for lighter national demand before additional reinforcing cold shots follow March 18-24.”

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