Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Natural Gas Traders May Have To Brace For Swings Amid Warm Autumn Spells 

By Investing.com (Barani Krishnan/Investing.com)CommoditiesOct 15, 2020 04:12
ca.investing.com/analysis/natural-gas-traders-may-have-to-brace-for-swings-amid-warm-autumn-spells-200441699
Natural Gas Traders May Have To Brace For Swings Amid Warm Autumn Spells 
By Investing.com (Barani Krishnan/Investing.com)   |  Oct 15, 2020 04:12
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Buckle up, folks. The “Bucking Bronco” of energy might return. The current forecasts for warmer weather, when it should be a steadily cooling autumn, could send natgas futures on a wild ride.

After three-weeks of gains with few halts, the buck for the gas rally stopped at the door of weather forecasting agencies as the higher temperatures they predicted for the coming days hit the market like a sledgehammer.

The front-month gas contract on the New York Mercantile Exchange’s Henry Hub dropped 7.7% to settle at $2.64 per million metric British thermal units on Wednesday. 

Natural Gas Daily
Natural Gas Daily

It steadied somewhat in Thursday’s pre-New York session, rising 0.6% to hover at $2.67 per mmBtu just after lunch in Asia, or 2:00 AM Eastern in the United States (0600 GMT).

Sentiment was probably helped by expectations of a positive gas weekly storage report expected later in the day from the U.S. Energy Information Administration (EIA). 

Ahead of the EIA data, due at 10:30 AM ET (14:30 GMT), industry analysts forecast that U.S. utilities injected 55 billion cubic feet into storage last week, after burning what was required for power and heating needs in the week to Oct. 9. 

Underwhelming Storage Report Likely Today

If true, that would be an underwhelming injection, compared to the 75 bcf addition to storage during the previous week ended Oct. 2.

Yet, once the EIA’s numbers are known, analysts expect the market’s attention to return to the weather in the coming days.

Dan Myers of Houston-based gas risk consultancy Gelber & Associates, said in an email to the company’s clients:

“Milder weather is expected throughout the next few weeks.” 

“Long term forecasts indicate a bleak future, with sustained warmer than expected weather lasting until January. Keep in mind these longer forecasts are subject to change and new developments may arise. However, current predictions indicate that higher-than-initially expected temperatures in the South may buoy winter demand in the future.”

The weather card aside, gas production in the coming days is also expected to be higher with output facilities on the U.S. Gulf Coast of Mexico returning to service from disruptions caused by Hurricane Delta.  

Gas Production To Rise As Hurricane Delta Bows Out

According to the Bureau of Safety and Environmental Enforcement, which comes under the Department of Interior, only 809 million metric cubic feet per day of Gulf gas production remained shut as of Thursday. This represented nearly 30% of Gulf production, down from the 36% noted Monday, which idled nearly 1,276 mmcfd. 

Myers noted:

“Gas production will continue to steadily rise throughout the week as operators return to offshore sites” of the Gulf.

The weather, meanwhile, is expected to offer little upside to gas prices, according to Bespoke Weather Services’ readings reported by naturalgasintel.com.

Bespoke said:

“Once again, the changes come thanks to a western shift regarding placement of the upcoming cold, resulting in much less impact in the key areas of the Midwest and East. This now places the 15-day period as a whole back below normal rather easily.”

Both the American and European models made sizable warmer changes on Wednesday, according to the forecaster. 

Bespoke’s forecast leans toward the European model, given the La Niña base case state. The late-month pattern shows less potential for notable cold as well, according to the forecaster. This would align with its theory of a warmer start to November if it’s upheld.

The American model, which had been much colder, lost even more demand in the latest run to better align with its European counterpart. Bespoke added:

“This is also consistent with what the climate models have been suggesting heading into November, having never wavered, at least so far.” 

ICAP Technical Analysis’ Brian Larose told naturalgasintel.com that while gas bears were unable to crack $2.784-$2.732 on Tuesday, it looks more like they ran out of time, rather than steam. 

If bulls can quickly carve out a bottom, there is still a chance to salvage the up-trend, he said. 

“If they cannot, the door will be open for a deeper retracement of the $2.373 to $2.995 advance … perhaps worse. Bulls have no time to waste.”

Mobius Risk Group concurs, saying:

“If weather is warmer than normal by a much larger margin than what is currently predicted by several professional forecasting services, the market will undoubtedly have to address lingering inventory concerns, but managing upside risk through hopes of a warm winter could prove to be problematic.”

LNG Pickup Dashed By Sunken Vessel

On the LNG front, news of a sunken barge in the Calcasieu Ship Channel quashed hopes for a quick resumption in full exports from the Cameron liquefied natural gas facility. 

Traders had been banking on steadily rising LNG exports, particularly from the Cameron terminal, since the facility was ramping up production following Hurricane Delta when the incident took place.

However, the U.S. Army Corps of Engineers, Coast Guard and others are now working to remove three obstructions in the Calcasieu Ship Channel following Delta. Crews would also need to determine how much shoaling took place during the latest hurricane before deep draft vessel traffic could resume. Dredging was nearly complete in the wake of Hurricane Laura when Delta crashed ashore on Oct. 9.

EBW Analytics Group pointed out that although Sabine Pass was ramping up production and Cove Point was back at full capacity following maintenance, the sunk barge impeding Cameron may offset some of this higher feed gas demand. “The market will have lost an estimated 1.6 Bcf/d of demand.”

Disclaimer: Barani Krishnan does not have a position in the commodities or securities he writes about.

Natural Gas Traders May Have To Brace For Swings Amid Warm Autumn Spells 
 

Related Articles

Natural Gas Traders May Have To Brace For Swings Amid Warm Autumn Spells 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email