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November gas posts gains on returning weather support

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November gas posts gains on returning weather support

After ending the week's opening session down 5.4 cents at $2.946/MMBtu, NYMEX November natural gas futures ticked higher overnight ahead of the Tuesday, Oct. 17, open, on the back of renewed weather support. At 6:45 a.m. ET, the contract was 5.1 cents higher at $2.997/MMBtu.

Updated midrange weather outlooks reflect warmer conditions across a majority of the country and the onset of cooler conditions over portions of the eastern U.S., fueling anticipation for lingering cooling demand and some early heating load in the coming weeks.

The National Weather Service sees above-average temperatures enveloping nearly the entire country in the upcoming six- to 10-day period, leaving only an area of Texas in the scope of average temperatures. Below-average temperatures do not appear in the outlook.

Further out to the eight- to 14-day period, above-average temperatures recede from portions of the central and eastern U.S. but linger over the Northeast, most of the Mid-Atlantic, Florida, the bulk of the Midwest, fringes of Texas and the entire West to ultimately hold over a majority of the country. A swath of below-average temperatures appears to encompass the edges of Texas, most of the Southeast, the lower borders of the Midwest and a patch of the Mid-Atlantic, hemmed in by average temperatures.

Weather-driven demand support implied by forecasts will likely limit the amount of natural gas available to be moved into underground storage facilities leading up to the close of the titular injection season on Oct. 31.

In the latest storage report for the week ended Oct. 6, the U.S. Energy Information Administration outlined an 87-Bcf build 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.

The week's data took net storage injections thus far in the refill season to 1,544 Bcf, or 15% lower than the five-year average of 1,817 Bcf.

The EIA estimates that a continuation of the slower-than-normal pace of storage rebuilding through the balance of the refill season will drive end-of-season inventories to 3,834 Bcf, while injections at par with the five-year average should bring working gas stocks to a total of 3,842 Bcf at the close of the season.

At the cash hubs, varied weather and demand expectations drove choppy price activity for natural gas booked Monday for Tuesday flow.

Looking at the key delivery locations, a near $1.60 increase steered Transco Zone 6 NY day-ahead gas price action to an index at $2.848/MMBtu, as an almost 5-cent gain took Chicago spot gas pricing to an average at $2.803/MMBtu and a better-than-1-cent uptick nudged PG&E Gate hub activity to an index at $3.190/MMBtu. By contrast, a roughly 12-cent reduction drove benchmark Henry Hub cash gas pricing to an average at $2.870/MMBtu.

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Regional indexes were thoroughly mixed. Northeast spot gas price activity added about 21 cents to average at $2.426/MMBtu, as Midwest next-day gas price action logged a roughly 3-cent slump in deals averaging at $2.692/MMBtu. West Coast cash gas prices rose by nearly 14 cents on average to an index at $2.554/MMBtu, as Gulf Coast day-ahead gas pricing faltered by around 8 cents to an index at $2.749/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.