December Nymex natural gas futures fell Thursday amid a bearish triple threat of exceptionally warm November weather, stout production and slightly weaker LNG exports, which bulls could not counter with the delay of a storage report that may have given them support.
The U.S. Energy Information Administration (EIA) had a planned systems upgrade on Thursday, the usual day to report storage results from the previous week. The print, which could show the first withdrawal of the season, is scheduled to be released next Thursday in conjunction with the results for the week ending Friday (Nov. 10).
Absent the report, the December Nymex natural gas futures contract shed its early morning gains and settled lower by 6.5 cents day/day at $3.041/MMBtu, the fourth consecutive decline. January shed 5.6 cents to settle at $3.333.
NGI’s Spot Gas National Avg. rose 12.0 cents to $2.225, which covered the four days into Monday, to extend its rebound to a second session. A quick-moving winter storm was moving across the Northeast, dropping temperatures from New York to Maine, boosting heating demand and sending the region’s gas prices up the fastest of any region on Thursday.
The weekend’s cooler shot of air across the Great Lakes and Northeast was forecast to make its way as far south as Texas and pull highs down out of the 80s over the weekend, NatGasWeather said. However, the cold spell was expected to only lift demand back to seasonal levels before warmer weather returns. There were only teases of near-seasonal coolness through Thanksgiving, the firm said.
The warmer temperatures had slightly throttled back Gulf Coast liquefied natural gas exports, to keep Lower 48 LNG exports below the around 14 Bcf level for a fifth day, according to NGI’s LNG Export Tracker. The volumes rose to a six-month high of around 14.7 Bcf last week, aided by cooler temperatures that boosted efficiencies at the export terminals.
On the production side, three days over the week were in contention to set an all-time high, according to Wood Mackenzie estimates. The firm pegged Wednesday and Thursday both at 105.1 Bcf/d, while Monday (Nov. 6), previously at that level, was shaved to 105 Bcf/d.
No Storage For You!
When EIA delivers the dual storage report on Thursday, it may show the season’s first withdrawal, thanks to the blast of cold weather that cut deep down into the country’s midsection.
NGI modeled a 9 Bcf withdrawal for the week ended Nov. 3, which would compare bullishly to a five-year average 36 Bcf injection and the 83 Bcf year-earlier build. Meanwhile, estimates submitted to Reuters ranged from a withdrawal of 20 Bcf to an injection of 21 Bcf, with the median landing at a withdrawal of 7 Bcf.
After the usual EIA storage report time came and went, analysts on the online energy platform Enelyst were musing about the coming week’s report. Some also joked about the lack of insight. “At least when there is no report, I can’t bust badly on my estimate,” one analyst said. “Survey says, everyone gets a trophy!” another analyst said.
Looking ahead to the remaining EIA prints for November, the ongoing warm-up across much of the country is expected to deliver more injections. Recently the 15-day forecast was trending as the third warmest mid-November since 1950, Mobius Risk Group said.
If the warm weather were to keep the next three EIA reports in injection territory, it could swell storage levels well above normal, according to Mizuho Securities analysts.
At this time last year, EIA had two storage builds remaining for the season, Mizuho analysts noted. If the prints were to “extend the injection season for one week longer than last year, there is an outside chance that total natural gas storage could hit 4.000 Tcf or greater for only the second time ever. Needless to say that would be a very negative price development, and not the way to start the winter natural gas season.”
Analysts at The Schork Report echoed that dour outlook for bulls, but with a lower trajectory for potential storage levels. Inventories could reach “3.830 Tcf by the time withdrawals commence. In fact, there is still a shot, albeit a long shot of 19:1 odds (5% probability) storage will finish at/above 3.900 Tcf.”
As if that was not enough, the Schork analysts said the streak of mild weather may run into the first half of December. “For this reason, natural gas prices face further headwinds in the days ahead, which in turn sets the table for a run at the $3/MMBtu psychological level,” they said.
For the similar week in 2022 ending Nov. 16, EIA printed an injection of 66 Bcf, and the five-year average was an injection of 20 Bcf.
Thursday Cash Prices
Spot natural gas prices powered higher for a second day, with gains seen across the East, Midwest, South and California. Declines were mostly confined to West Texas and the Rockies.
All hubs in the Northeast and Appalachia showed gains Thursday, which traded for the four-day delivery period through Monday. Algonquin Citygate led the way, climbing 99.0 cents day/day to average $2.935. Columbia Gas in Appalachia rose 15.0 cents to $1.765.
The Midwest was a mix of modest gains and losses. Chicago Citygate shed 1.5 cents to $2.180, while Parkway/Union rose 14.5 cents to $2.240.
West Texas prices fell across the board, though none flirted with going negative again. El Paso Permian fell 29.5 cents to 83.5 cents. Transwestern again held onto its lowest price for the region at 80.5 cents, down 11.5 cents on the day.
Meanwhile, in California, SoCal Citygate fell for a third session, down 57.5 cents to $5.915. That was enough to push its premium to SoCal Border Avg. below $4. That differential has recently drawn the fire of buyers contending with cuts to nominations because the pipeline has too much gas to maintain balance.
Some areas in Texas, the Midwest and Mid-Atlantic recently have seen record-breaking warmth, and more daily records could be hit Thursday with temperatures 15-25 degrees above normal, the National Weather Service said. Beginning Thursday night, cooler weather was expected to take over, with rainy weather forecast to move across a broad swath of the country, the forecasters said.
“Pockets of freezing rain” were forecast to drench parts of Appalachia, the forecaster said Thursday. Thunderstorms then were expected to shift south into the Texas/Central Gulf Coast on Friday and Saturday as the cold front worked its way through the Southeast.
