With weather models shedding more summer heat and Lower 48 supply trending higher, September natural gas futures resumed declines in early trading Wednesday.
Coming off a one-day gain, the September Nymex contract was down 4.6 cents at $2.080/MMBtu as of 8:49 a.m. ET.
U.S. natural gas markets this week have gotten support from some of the season’s hottest weather taking hold and the Freeport LNG terminal bouncing back to near full capacity. Countering that support has been robust gas production adding to already stout storage levels.
“While yesterday's price gain helped defend the $2.00/MMBtu psychological level, the market remains engulfed in oversupply on a seasonal basis,” according to EBW Analytics Group’s Eli Rubin, senior analyst.
Wood Mackenzie daily production estimates for Monday and Tuesday were both revised higher to 102.8 Bcf/d, putting the seven-day average at 102.5 Bcf/d. Wednesday’s early-cycle estimate was 102.3 Bcf/d.
Rubin added some perspective to the 1 Bcf/d move higher in output over the past week. He said some of the higher output may in part be the result of a late month effect for pipeline nominations. Pipeline scrapes could drop off at the start of August, he said.
If natural gas markets needed “another reason for selling,” the European model shed 10 cooling degree days (CDD) of demand over the past 24 hours, NatGasWeather said. The American model lost 5 CDDs over the same period.
Most of the lost demand came during the 10- to 15-day forecast period when weather systems were expected to cool northern regions, the forecaster said.
Meanwhile, weather models maintained that an Atlantic tropical wave does not pose a threat to the Gulf Coast “at this time,” Wood Mackenzie said.
The National Hurricane Center (NHC) expanded the possible path of a system tracking toward the Caribbean north from Florida to North Carolina. “The southeastern U.S. should monitor the progress of this system,” NHC said.
Forecasters have predicted an active hurricane season. Beryl, which stormed ashore Texas in early July, caused damage to the Freeport liquefied natural gas export terminal, extending its outage as the facility made repairs.
