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NYMEX November natural gas futures gain nearly 6 cents on short covering

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NYMEX November natural gas futures gain nearly 6 cents on short covering

Losing 3.0 cents in the Oct. 6 trading day, NYMEX November natural gas futures recovered in the Tuesday, Oct. 10, session to end nearly 6 cents higher on the day.

Moving from a low of $2.833/MMBtu to a high of $2.896/MMBtu, the November natural gas futures contract ended the session at $2.891/MMBtu, up 5.8 cents on short covering.

Despite the day's advance, the natural gas market's fundamental outlook remains bearish overall.

Weather forecasts suggest lackluster demand in the medium term, as the projected prevalence of above-average temperatures is likely to keep lingering cooling load limited and heating demand at bay.

The latest National Weather Service forecast maps for both the six- to 10-day and eight- to 14-day periods show above-average temperatures stretching over the entire eastern and central U.S. into portions of the Southwest, confining the scope of average to below-average temperatures to much of the West.

SNL Image

SNL Image

Subdued demand implied by weather projections should allow for natural gas production to flow more freely into underground storage facilities beyond the end of the titular injection season Oct. 31.

After the U.S. Energy Information Administration reported a 42-Bcf injection for the week that ended Sept. 29, total U.S. working gas stocks sit at 3,508 Bcf, or 161 Bcf below the year-ago level and 8 Bcf below the five-year average of 3,516 Bcf.

In the next few weeks, storage injection rates are likely to be impacted by curtailed production due to Hurricane Nate, which made landfall on the Gulf Coast late Oct. 7.

According to an Oct. 10 update from the Bureau of Safety and Environmental Enforcement, 46.12% of Gulf of Mexico natural gas production, equivalent to almost 1.5 Bcf/d, remained offline, down from a peak of 2.5 Bcf/d reported offline as of Oct. 8. About 1.02 million barrels of oil per day, or about 58.53% of total regional oil output, was still shut in as of Oct. 10.

Additionally, an 11 a.m. ET update from the National Hurricane Center showed Tropical Storm Ophelia was 780 miles west-southwest of the Azores, with maximum sustained winds of 50 miles per hour. A gradual strengthening is expected over the next 48 hours, and Ophelia is expected to become a hurricane by Oct. 12.

In step with the day's gains in the futures market, next-day natural gas prices at the major consuming hubs were generally higher Tuesday.

In the Northeast at Transco Zone 6 NY, spot gas was priced at $2.90, up about 2 cents. Farther south, however, day-ahead gas at Tetco-M3 spiked more than $1.50 to a daily average near $2.80.

In the Gulf Coast producing region, gas at the benchmark Henry Hub in Louisiana gained about 5 cents to an index near $2.90.

In the Midwest, product at Chicago was assessed at an average of about $2.75, also rising about 5 cents on the day.

On the West Coast, natural gas prices at PG&E Gate were up 3 cents to an index near $3.10. Spot gas at the SoCal Border was quoted at an average near $2.60, up about 1 cent.

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, natural gas index prices, as well as forwards and futures, visit our Commodities pages.