Natural Gas Futures Modestly Higher Early Amid Production Dip ... - Natural Gas Intelligence

Natural Gas Futures Modestly Higher Early Amid Production Dip, LNG Strength - Natural Gas Intelligence

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Natural Gas Futures Modestly Higher Early Amid Production Dip, LNG Strength

Evidence of a production dip amid springtime pipeline maintenance helped natural gas futures claw back a few pennies in early trading Tuesday.

Coming off an 11.9-cent slide in Monday’s session, the May Nymex contract was up 3.0 cents to $2.127/MMBtu at around 8:40 a.m. ET.

The temperature outlook for April “continues to hemorrhage demand” for natural gas, including a sizable decline in degree days over the past 24 hours, EBW Analytics Group analyst Eli Rubin told clients early Tuesday.

Moderating temperatures could “slash more than 9 Bcf/d of demand for gas” between the current storage week and the April 14-20 storage period, Rubin said.

“We caution that seasonal losses may be amplified with acutely weather-sensitive home offices ratcheting down heating demand,” the analyst added.

Still, aside from weather, “fundamentals are firming,” according to Rubin. This includes “LNG feed gas demand steadying above 14.0 Bcf/d and pipeline maintenance limiting early-cycle production nominations this morning. With an extremely warm weather outlook exacerbating storage overflow fears, however, natural gas faces continued bearish risks over the next seven to 10 days.”

Daily production data from Wood Mackenzie showed a 2.6 Bcf/d day/day decline in volumes as of early Tuesday, with total domestic output estimated at around 97.9 Bcf/d.

“The declines are concentrated in the Northeast, where there are maintenance or operational issues underway, but revisions are expected in tomorrow’s sample,” Wood Mackenzie analyst Laura Munder said in a note to clients.

Total production flowing out of the Northeast was off an estimated 1.4 Bcf/d, mostly in Pennsylvania. Northeast Pennsylvania production was down around 790 MMcf/d, with Southwest Pennsylvania volumes down around 250 MMcf/d, according to Wood Mackenzie estimates.

Meanwhile, analysts at ICAP Technical Analysis said following Monday’s slide that they’re still “on the lookout for any evidence that could indicate bottoming action.”

ICAP analyst Brian LaRose pegged $2.182, $2.284 and $2.358 as “the levels that must be exceeded to entertain the possibility of a recovery taking hold. Below $2.020-2.000, still peg $1.967-1.944 and $1.679 as the next steps to the downside.”

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