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November gas futures rise ahead of storage data release


Essential Energy Insights - February 2021


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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

November gas futures rise ahead of storage data release

Following a scant 0.2-cent slump in the prior session to finish at $2.889/MMBtu, NYMEX November natural gas futures advanced overnight ahead of the Thursday, Oct. 12, open, as traders jockeyed for positions leading up to the midmorning release of the weekly storage report. At 6:33 a.m. ET, the contract was 1.3 cents higher at $2.902/MMBtu.

Storage building is expected to accelerate when the U.S. Energy Information Administration releases its next weekly inventory data at 10:30 a.m. ET on Thursday, for the week ended Oct. 6. Pre-data estimates call for an addition to stocks of anywhere from 77 Bcf to 91 Bcf, with consensus formed at an 84-Bcf injection. This would compare to an 87-Bcf five-year-average build and a 79-Bcf injection seen in the corresponding week in 2016.

The week's data would come on the heels of a modest 42-Bcf build reported by the EIA for the week to Sept. 29 that took total working gas stocks to 3,508 Bcf, or 161 Bcf below the year-ago level and 8 Bcf below the five-year average of 3,516 Bcf. An addition to stocks at consensus would bring overall inventories to 3,592 Bcf, trimming the year-on-year deficit to 156 Bcf but expanding the year-on-five-year-average deficit to 11 Bcf.

Degree day data from the National Oceanic and Atmospheric Administration for the week to Oct. 7 reflects unsupportive weather, outlining heating degree days that were 43.5% fewer than normal, even as cooling degree days were 42.1% above normal.

Weather as forecast looks to keep heating demand deflated and cooling load limited, as prevalent above-average temperature readings in forecasts imply lower high temperatures given the calendar. Revised National Weather Service projections show above-average temperatures blanketing the bulk of the country through both the six- to 10-day and eight- to 14-day periods, confining the scope of average to below-average temperatures to a few parts of the West.

Demand and supply levels could also be impacted by activity in the tropics, as the hurricane season continues through Nov. 30.

Production continues to improve in the wake of Hurricane Nate. The Bureau of Safety and Environmental Enforcement in an Oct. 11 report said less than 0.7 Bcf/d of natural gas production in the Gulf of Mexico is still shut-in, down from a peak of 2.5 Bcf/d reported offline Oct. 8. The amount of production now idled is equal to a little more than 20% of the region's gas-producing capacity.

Meanwhile, the National Hurricane Center is presently monitoring the now-upgraded Hurricane Ophelia, last located about 725 miles southwest of the Azores, packing maximum sustained winds of 85 mph and moving northeastward at 3 mph, as of 5 a.m. ET on Oct. 12. Some slight strengthening is anticipated over the next day or two, as Ophelia continues to move northeast Thursday before accelerating east-northeastward or northeastward on Friday. It is not anticipated to impact the U.S.

In cash activity, natural gas values for next-day flow predominantly favored the upside Wednesday, as prices derived support from recent gains in futures.

Among the key delivery locations, the uptrend was led by PG&E Gate day-ahead gas prices that rose by about 7 cents on average to an index at $3.142/MMBtu, followed by benchmark Henry Hub spot gas pricing that notched an almost 4-cent increase in transactions averaging at $2.923/MMBtu and Chicago hub activity that added roughly 2 cents to average at $2.785/MMBtu. Transco Zone 6 NY cash gas price action defied the wider advance with a near 24-cent decline to an index at $2.650/MMBtu.

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On a regional basis, West Coast next-day gas pricing was lifted by around 8 cents in deals averaging at $2.394/MMBtu, while Gulf Coast cash gas price activity was bolstered by about 2 cents to an index at $2.793/MMBtu. Midwest spot gas prices climbed by roughly 6 cents on average to an index at $2.695/MMBtu, as Northeast day-ahead gas price action deflated by almost 17 cents against the dominant uptrend to average at $2.203/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.