NGI - Weather Model ‘Chaos’ Leaves Natural Gas Futures Down a Third Day

October 9, 2019 – Natural Gas Intelligence

Weather Model ‘Chaos’ Leaves Natural Gas Futures Down a Third Day

By Leticia Gonzales


With a growing disparity between weather models and strong daily production data, natural gas traders pushed Nymex futures down another nickel on Wednesday. With traders expecting another loose storage stat in the latest government data due out on Thursday, the November contract settled 5.4 cents lower at $2.234/MMBtu. December slipped 5.5 cents to $2.436.

Spot gas prices were mixed again, with mostly small changes seen across the United States. The standouts were on both coasts as several Western markets plunged more than 50 cents on the day, while Appalachian markets notched 20-cent-plus gains, leaving the NGI Spot Gas National Avg. down 7.5 cents to $1.815.

Records and extremes have been a running theme in the natural gas market this year, according to RBN Energy. The prompt month now sits about 45 cents below the $2.68 summer peak reached in mid-September and is yet another reflection of the weakness the market has experienced this storage injection season, which has resulted in daily prompt-month contract settlements averaging the lowest in over 20 years. […]

[…] With less than a month of the official injection season left, futures are at some of the lowest levels seen in more than two decades. Daily Henry Hub prompt futures settles from April through September this year averaged $2.41, the lowest seasonal average since the late 1990s, according to CME/NYMEX data from the EIA. So far in October, prompt futures are averaging around $2.30/MMBtu, nearly $1 below this time last year and again the lowest since 1998. The all-time low for the November contract is $1.557, which was set in October 1994.

“At this rate, even the full-year average price for 2019 could end up posting at the lowest on this side of Y2K, especially if there’s a mild start to winter,” RBN analyst Sheetal Nasta said.

The near-term weather outlook and supply/demand fundamentals indicate the year/year surplus will exceed 500 Bcf by late October, and the surplus versus the five-year average will flip to a nearly 50 Bcf surplus by then, according to Nasta. […]

[…] On the pipeline front, Gulf South Pipeline from Wednesday to Thursday will conduct maintenance at the Harrisville Compressor Station in Simpson County, MS. During this time, Gulf South is estimating impacts of up to 243 MMcf/d to all services at the Expansion Area 19 Scheduling Group except for primary firm.

“While assessing direct impacts to flows on Gulf South is challenging, maintenance events of this size have historically led to a decline in system receipts similar in scope to the stated impacts. Overall, this should not drastically affect the Gulf South system as it is very well supplied and other routes for gas are plentiful,” Genscape analyst Dominic Eggerman said.

Over in Appalachia, next-day gas at Dominion South jumped 27.5 cents to $1.395, which was similar to other increases in the region.

Transco Zone 6 non-NY in the Northeast climbed 34.0 cents to $1.560.


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