August natural gas futures fell below key support through midday trading Monday as weather forecasts trimmed demand outlooks and Lower 48 gas output rose to a new three-month high.
Here’s the latest:
- August Nymex natural gas futures down 12.3 cents to $2.478/MMBtu as of 2:40 p.m. ET
- Lower 48 gas production rose to 102 Bcf/d on Sunday, the highest level since March 11, Wood Mackenzie data show
- Category 4 Hurricane Beryl is tracking to cross Mexico’s Yucatan Peninsula on Friday, potentially avoiding a direct strike on the Lower 48
The August contract started to trade below $2.500/MMBtu before 11 a.m. ET before bouncing on either side of the closely watched level into midday. “Critical support sits at $2.50,” EBW Analytics Group analyst Eli Rubin said.
Forecasting from DTN shed 6.5 cooling degree days (CDD) from its Lower 48 forecasts over the next three weeks since Friday, equating to 10.4 Bcf lower demand, Rubin said.
Maxar’s Weather Desk also pointed to cooler temperatures. However, NatGasWeather painted a more mixed picture with weekend updates both shedding and adding modest amounts of CDD in the American and European weather models. Both forecasts continued to point to the hottest first half of July of the past 50 years, however, both models have tended to overestimate summer’s heat “and the expectation is they are doing so again this summer,” NatGasWeather said.
Wood Mackenzie estimated Lower 48 gas production fell to 100.0 Bcf/d on Monday, but analysts expected that number to be revised higher in later cycles because of volatility at the start of the month.
- Freeport LNG terminal’s Train 2 was down about 15 hours from Saturday to Sunday, but flows have bounced back on Monday
- Cheniere Energy Inc.’s Sabine Pass liquefied natural gas export facility may have completed a round of maintenance
- U.S. LNG feed gas demand climbed to about 12.9 Bcf/d for Monday, highest since last Sunday, according to NGI’s U.S. LNG Export Tracker
Freeport staff told Texas officials that the facility’s Train 2 tripped because of compressor issues. Feed gas flows fell to about 1.6 Bcf/d Saturday and 1.3 Bcf/d Sunday, NGI data show. On Monday, service regained its earlier June pace with nominations at around 1.9 Bcf/d. Kpler has a ship in berth loading and more scheduled through the week.
Meanwhile, an uptick in feed gas flows to Sabine Pass over the weekend hints at the terminal wrapping up its traditional June maintenance.
Flows to Sabine Pass over the weekend topped out above 4.3 Bcf on Sunday and were scheduled to be around 4.2 Bcf on Monday, NGI data show. “The terminal could likely run a bit higher, with optimal summer flows near 4.4 Bcf/d,” Criterion Research Inc.’s James Bevan, vice president of Research, said on online energy platform Enelyst.
Elsewhere, flows to Cheniere’s Corpus Christi and Sempra Infrastructure’s Cameron LNG terminals were stable at about 2.3 Bcf/d and 1.9 Bcf/d, respectively, NGI data show.
- NGI modeling 29 Bcf injection into Lower 48 storage for week ending June 28
A print in-line with NGI’s estimate for this week’s U.S. Energy Information Administration (EIA) report would further eat into the Lower 48’s lofty storage surplus.
Last week’s report showed working gas in underground storage stood at 528 Bcf, or a nearly 21% surplus to the five-year average. All but eight of the last 10 weekly injections have lagged the five-year average, narrowing the surplus from 37% in mid-April.
For the week ending June 28, the five-year average is an injection of 69 Bcf, while the year-earlier period saw an 76 Bcf increase.
- Henry Hub spot prices lower at $2.205, down 18.5 cents, NGI’s MidDay Price Alert data show
- Southeast weaker on cooler forecasts, West Texas prices stay negative
Waha rose 8.5 cents to negative $2.035 on Monday, according to NGI’s MidDay Price Alert.
Transco Zone 5 in the Southeast shed 25.5 cents to average $2.560, as forecasts for the region turned cooler.
Weather model runs on Monday pulled Southeast forecasts for the next 10 days below normal while the 11- to 15-day outlook is only now marginally above normal, Bevan said. The cooler look resulted in a demand loss of around 9 Bcf for the region, stacking onto losses from Thursday and Friday, Bevan said.
Also likely impacting prices in the Southeast is supply from the Mountain Valley Pipeline LLC (MVP), which officially began firm transport service on Monday. The new pipeline is scheduled to deliver its highest volume yet to the Transcontinental Gas Pipe Line Co. (aka Transco) on Monday at around 0.97 Bcf/d, or nearly half its capacity, according to Wood Mackenzie flow data.
Transco’s Station 160 in North Carolina, which is south of the mainline’s interconnect with MVP, showed southbound flows into the Southeast rose above 2 Bcf/d Monday, setting a new high for 2024, Bevan said.
