May Natural Gas Eases Lower Ahead of Potential Surplus-Shrinking ... - Natural Gas Intelligence
May Natural Gas Eases Lower Ahead of Potential Surplus-Shrinking EIA Print - Natural Gas Intelligence
This article is part of NGI's Daily Gas Price Index. Click here to request a free trial keyboard_arrow_right
Markets| Natural Gas Prices| NGI All News Access
May Natural Gas Eases Lower Ahead of Potential Surplus-Shrinking EIA Print
Natural gas futures were trading just shy of even early Thursday as mild April forecasts and a healthy storage cushion exiting the winter heating season kept the pressure on prices. The May Nymex contract was off 1.6 cents to $2.139/MMBtu at around 8:40 a.m. ET.
The $2.197 high for May natural gas in Wednesday’s session saw the front month recover to within a couple pennies of last Friday’s settle despite a “collapse” in weather-driven demand expectations in recent forecasts, EBW Analytics Group analyst Eli Rubin told clients early Thursday.
“Rising daily space heating demand into the holiday weekend and gas production being restricted by pipeline maintenance (Permian and Appalachian production nominations are each down 1.0 Bcf/d week/week) have provided physical market support at Henry Hub that could extend through today,” Rubin said.
By next week, however, recovering production volumes and “plunging daily heating demand” could see prices come under downward pressure once again, the analyst added.
Meanwhile, expectations ahead of the Energy Information Administration’s (EIA) 10:30 a.m. ET storage report are for a larger-than-average late-season withdrawal in the low-20s Bcf for the period ending March 31.
Bloomberg’s poll as of Wednesday found withdrawal estimates spanning 18 Bcf to 24 Bcf, with a median draw of 20 Bcf. A Reuters survey found estimates ranging from withdrawals of 10 Bcf to 28 Bcf, with a median decrease of 22 Bcf.
NGI modeled a pull of 22 Bcf, matching the average found in a Wall Street Journal poll. EIA recorded a 24 Bcf pull for the year-earlier period, while the five-year average shows no net change to stockpiles for the week.
“It was colder than normal over the western, central and northern U.S., while warmer than normal over East Texas, the South and Southeast,” NatGasWeather said of temperatures during the EIA report period. “We expect a draw of 28-29 Bcf, to the bullish side, aided by lighter wind energy generation.”
As for overnight forecast trends, models adjusted slightly colder following “huge warmer trends” in recent days, the firm said.
The weather data “remained exceptionally bearish” for early next week through April 19 “as much of the U.S. warms into the very comfortable 60s to 80s for larger than normal builds,” NatGasWeather said.
The upcoming EIA report should trim the current storage surplus to the five-year average to near 300 Bcf, the firm said. However, with warm temperatures and mild weather-driven demand setting up for mid-April, the surplus is poised to climb back toward the 350-375 Bcf range, NatGasWeather said.
“It will then be up to either hotter or colder trends for late April or surpluses will increase toward 400 Bcf,” NatGasWeather added. “Clearly the background state is quite bearish, and it will take a much tighter supply/demand balance, along with bullish weather” to erase the storage cushion.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |