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Natural Gas Futures Slide as Market Awaits Fresh Data; Cash Also Weakens | 2020-06-05

Natural gas futures were slightly lower but still range bound to finish the week as the July Nymex contract swung in a less than 10-cent band before settling Friday at $1.782, off 4.0 cents day/day. August was down 3.1 cents to $1.886.

Spot gas prices also declined as Tropical Storm Cristobal headed toward the Gulf Coast, with winds and heavy rains from the storm seen slashing demand, but not threatening oil and gas operations. NGI’s Spot Gas National Avg. fell 11.0 cents to $1.555.

[NGI’s natural gas price indexes have included trade data from both price reporters and the Intercontinental Exchange (ICE) since 2008]

Not much changed overnight in the background state for natural gas, with weather models still showing “a very warm pattern” into the second week of June, pushing power burns to a relatively strong 35-37 Bcf/d, according to NatGasWeather. However, the June 11-17 pattern isn’t hot enough except across the Southwest and Texas as weather systems track across the northern and eastern United States, the firm said.

The June 18-21 period is now the period of greatest interest to see if the upper ridge finally can get “hot enough to intimidate,” and the latest Global Forecast System and latest European models showed a little hotter risks. “Whether this sticks and whether it trends hot enough to impress would need more data come on board, but the latest European model data did tease something finally more impressive around days 13-16 of the forecast,” NatGasWeather said.

With highs in Washington, DC, soaring into the 90s, the heat over the past week may temporarily stall the recent run of triple-digit storage injections. The Energy Information Administration (EIA) on Thursday reported that inventories rose 102 Bcf for the week ending May 29, boosting stocks to some 762 Bcf above year-ago levels. It was the fourth report in five weeks in which the EIA reported a 100 Bcf-plus injection.

Mobius Risk Group said the implied build based on daily storage data from publicly available pipeline bulletin boards points to an injection of less than 100 Bcf in the next EIA report. “If such a result is realized, the storage surplus will see further contraction, and an intensified focus” on daily liquefied natural gas (LNG) feed gas demand “will materialize.”

Indeed, although Lower 48 production remains more than 10 Bcf/d off late-November highs, and industries are starting to recover from coronavirus-related restrictions, sinking LNG demand has prevented futures from breaking out of their recent range. With Covid-19 acting as the straw that broke the camel’s back for the global gas market, U.S. exports have become uneconomic at current prices and may remain so throughout the summer and into the fall.

Energy Aspects pointed out that no U.S. cargoes were delivered to the UK last month, in contrast to four in April and seven in March. This has helped reduce the country’s aggregate gas import take.


Read More: Natural Gas Futures Slide as Market Awaits Fresh Data; Cash Also Weakens | 2020-06-05

2020-06-05 21:23:00

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