Surplus Trimmed, but Analysts See Oversupply as Natural Gas Futures Nudge Higher Early - Natural Gas Intelligence

Surplus Trimmed, but Analysts See Oversupply as Natural Gas Futures Nudge Higher Early - Natural Gas Intelligence
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Surplus Trimmed, but Analysts See Oversupply as Natural Gas Futures Nudge Higher Early

Natural gas futures saw modest gains in early trading Friday as the market continued to mull a surplus-shrinking result from the latest round of government inventory data. The April Nymex contract was up 2.9 cents to $2.183/MMBtu at around 8:50 a.m. ET.

The Energy Information Administration (EIA) on Thursday reported a 72 Bcf withdrawal from U.S. natural gas storage facilities during the week ending March 17, slightly lighter than pre-report expectations.

The pull was tighter versus the five-year average 45 Bcf withdrawal and reduced the year-on-five-year storage surplus to 351 Bcf, or plus-22.7%, EIA data show.

Based on the latest EIA print, Wood Mackenzie analysts estimated the market was loose versus the five-year average by around 2.4 Bcf/d when compared to degree days and normal seasonality. This is in line with the average of the previous four weeks, according to the firm.

Tudor, Pickering, Holt & Co. (TPH) analysts similarly estimated the market was 3 Bcf/d oversupplied on a weather-adjusted basis, compared to 2 Bcf/d oversupplied in the prior week.

“With withdrawal season coming to a close in two weeks’ time, cumulative draws have totaled just around 1.6 Tcf (minus 0.5 Tcf versus the five-year average),” the TPH analysts said.

Based on this, the firm’s carryout estimate for the end of the withdrawal season would total roughly 1.85 Tcf, or 21% above the five-year average.

“Looking ahead to April, the latest forecasts indicate around 370 total degree days for the month,” or 17% below the five-year average, the TPH analysts said. The “focus continues to shift gears to the latest in power burn, with demand continuing to outpace norms this week (plus-3.7 Bcf/d versus the five-year average), but moderating relative to month-to-date results (plus-4.3 Bcf/d versus the five-year average).”

Meanwhile, updated weather maps from Maxar’s Weather Desk early Friday showed cooler-than-normal temperatures largely confined to northern and western portions of the country over the next 15 days.

The forecaster’s latest six- to 10-day outlook (next Wednesday through April 2) underwent “a mix of changes, trending cooler from the Interior West to Central and warmer in the East. The changes are associated with low pressure, which tracks out of the West and into the Midcontinent from early to mid-period. The low reinforces a trough over the West with continued below to much below normal temperatures.”

Cooler temperatures “are also on day six in the Midwest and day seven in the East, but conditions then warm with a round of above to much above normal temperatures in the Eastern Half during the mid to late period,” Maxar added.

For the 11- to 15-day time frame (April 3-7), Maxar made warmer adjustments to the outlook for temperatures along the West Coast, with cooler trends for the eastern half of the Lower 48.

“Still, much of the same themes from the nearer term periods are retained for this time frame,” Maxar said. “…Below normal temperatures are early in the Midwest and at mid-period in the East, while aboves are early in the Southeast and return late to the South.”

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