Following a 1.6-cent advance in the prior session to finish at $2.962/MMBtu, NYMEX November natural gas futures deflated overnight ahead of the Wednesday, Oct. 18, open, in a round of technical selling and despite some supportive fundamentals. At 6:51 a.m. ET, the contract was 5.3 cents lower at $2.909/MMBtu.
The latest revisions to mid-range weather outlooks feed expectations for a combination of lingering cooling demand and early heating load, which could limit the amount of natural gas available to be moved into underground storage facilities in the coming weeks.
The National Weather Service sees above-average temperatures holding over nearly the entire Northeast, parts of the Mid-Atlantic and the bulk of the country's western half through both the upcoming six- to 10-day and eight- to 14-day periods. Below-average temperatures encompass a majority of the Southeast, about half of the Gulf Coast and a small section of the Midwest in the shorter-range view, but expand in scope to overtake a majority of the country's eastern two-thirds in the longer-range period. Average temperatures settle over the balance of the country.
Mixed weather that generated a combination of cooling and heating demand is already expected to have kept a lid on the rate of weekly storage injections when the U.S. Energy Information Administration releases its next inventory data at 10:30 a.m. ET on Thursday.
Market participants looking to the forthcoming storage report that will cover the week ended Oct. 13 anticipate an addition to stocks in the 50s Bcf, which would compare to a 78-Bcf five-year-average build and a 77-Bcf year-ago injection.
For the week to Oct. 11, much of which will be reflected in the upcoming inventory data, colder weather in the western half of the country is seen to have prompted elevated levels of heating demand, while warmer conditions in the eastern half bolstered electricity demand for home cooling along the Atlantic Coast, the EIA said in its latest "Natural Gas Weekly Update." Total U.S. gas consumption during week in review was up 7% week on week, as an 18% increase in residential/commercial-sector demand combined with a 12% gain in power burn.
A storage build within the range of expectations would signal a step-down in the pace of inventory rebuilding, as it would come on the heels of an 87-Bcf injection during the week ended Oct. 6 that took total working gas stocks to 3,595 Bcf, or 153 Bcf below the year-ago level and 8 Bcf below the five-year average of 3,603 Bcf.
In cash trading, day-ahead natural gas markets had a mixed showing Tuesday on the back of diverging demand forecasts.
Looking at the key hubs, a near 25-cent decline steered Transco Zone 6 NY spot gas price action to an index at $2.600/MMBtu, as a roughly 1-cent slump nudged Chicago next-day gas pricing to an average at $2.795/MMBtu. By contrast, an almost 12-cent increase drove PG&E Gate hub activity to an index at $3.309/MMBtu, as a better-than-1-cent uptick took benchmark Henry Hub cash gas pricing to an average at $2.883/MMBtu.
On a regional basis, Northeast day-ahead gas price activity logged a roughly 9-cent decrease in transactions averaging at $2.333/MMBtu, as Midwest spot gas pricing tacked on about 1 cent on the session to average at $2.706/MMBtu. West Coast cash gas price action was unchanged day on day at an index at $2.554/MMBtu, while Gulf Coast next-day gas prices were up nearly 3 cents on average at an index at $2.779/MMBtu.
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