Archive for the ‘Energy’ Category

Natural Gas Price Fundamental Daily Forecast – Hedge Sellers in Control as Spec Buyers Await Fresh Weather Forecasts

June 25th, 2018

 

The key support area on the daily chart is $2.885 to $2.848. This zone also represents value so a break into this area could bring in speculative buyers. If there is going to be another rally then it’s likely to start on a test of this zone.

 

Natural gas futures are trading lower early Monday which means investors are pricing in milder temperatures this week than originally forecast. Traders could also be expressing concerns over rising production.

At 0717 GMT, August Natural Gas is trading $2.917, down $0.028 or -0.95%.

The current weather forecasts call for cooler temps at the start of the week in key demand areas throughout the Midwest and parts of the East then the return of heat later in the week. Therefore, overall demand is expected to be moderate to increasingly high.

Today’s early price action suggests investors want further confirmation that temperatures will heat up after July 1. This data may not be made available until Monday or Tuesday afternoon. Until then, the short-selling hedgers appear to be taking control. Any mention of renewed heat, or lingering heat during the first two weeks of July will force these shorts out of the market, and could even encourage some speculative buying.

Currently, the supply deficit is 27.4% lower than levels at this time a year ago, and about 19.9% below the five-year average for this time of year. This is why the market has been so sensitive to the weather forecasts.

Forecast

The key support area on the daily chart is $2.885 to $2.848. This zone also represents value so a break into this area could bring in speculative buyers. If there is going to be another rally then it’s likely to start on a test of this zone.

Until the new 6 – 10 day weather forecasts are released, we have to assume that prices will continue to retreat until they hit the support zone at $2.885 to $2.848. Trader reaction to this zone will set the tone for the day, and perhaps the week.

 

June 13th, 2018

Mixed fundamentals are pressuring natural gas futures for a second session after a forecast of hotter temperatures drove the market higher at the start of the week.

At -1000 EST, August Natural Gas futures are trading $2.966, up 0.027.

The price action in the nearby July futures contract and the next up August contract clearly shows that $3.000 is major resistance.

While most of the focus recently has been on the weather, traders can’t overlook output. Record high production levels so far this year

are one of the reasons prices have stayed below the $3 level, even with a 22% deficit in national gas stocks; the five-year average is $2.329/MMBtu.

Additionally, according to the Energy Information Administration, current working gas in underground storage sits at 1.817 Tcf for the week ended June 1.

Based on S&P Global Platts Analytics estimates, U.S. production fell 1.4 Bcf on the day to 76.8 Bcf Tuesday, largely due to production declines in the Rockies

and the Northeast. What could lead to further price pressure, or at least cap gains is expectations of a rise in production to 77.9 Bcf/d over the next seven days.

 

 

Natural Gas – 6/6/2018

June 6th, 2018

NYMEX July natural gas futures were broadly steady in early Wednesday trading, ticking up slightly after Tuesday’s fall and nearly back to the $2.90/MMBtu mark after weather-related losses over previous trading sessions.

The NYMEX July futures contract was seen trading at $2.899/MMBtu at 0700 EDT (1100 GMT), 0.9 cent higher than Tuesday’s settlement of $2.89/MMBtu.

The contract ranged between $2.887/MMBtu and $2.912/MMBtu, easing lower as the bearish sentiment continued, after the contract lost 4 cents Tuesday on the back of a mixed weather outlook.

In its latest forecast, US National Weather Service showed above-average temperatures over most of the US in its 6-10 day outlook, while below-average conditions were expected in the Northwest of the country.

Milder temperatures could drive demand further down, with total US demand falling 600 MMcf to 70.4 Bcf Tuesday.

 

 

 

5-17-2018 Storage Up, Gas Down

May 17th, 2018

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. increased by 106 billion cubic feet in the week ended May 11, compared to forecasts for a build of 104 billion.

Thursday’s data compared with a gain of 89 billion cubic feet (bcf) in the preceding week and represented a decline of 821 billion from a year earlier and was also 501 bcf below the five-year average.

Total U.S. natural gas storage stood at 1.538 trillion cubic feet, 34.8% lower than levels at this time a year ago and also 24.6% below the five-year average for this time of year.

After the report, natural gas for delivery in June on the New York Mercantile Exchange fell 1.9 cents, or about 0.7%, to trade at $2.796 per million British thermal units by 10:33AM ET (14:33GMT).

Futures had been trading down 1.7 cents, or about 0.6%, at $2.798 prior to the release of the supply data.

The commodity was on track for its third straight session of declines, wiping out a rally of 1.3% on Monday as updated forecasting models pointed to above-average temperatures covering most of the country through the end of May.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.

 

05/10/2018: Natural Gas Storage Builds , Beats Averages

May 10th, 2018

The U.S. Energy Information Administration reported a net 89-Bcf injection into natural gas inventories in the Lower 48 during the week ended May 4 that was at par with consensus and above averages.

The injection matched consensus ahead of the report’s release that called for a 89-Bcf build to stocks, and compared above respective year-ago and five-year average injections of 49 Bcf and 75 Bcf, respectively.

The injection brought total U.S. working gas supply to 1,432 Bcf, or 863 Bcf below the year-ago level and 520 Bcf below the five-year average storage level of 1,952 Bcf.

June natural gas futures were trading higher ahead of the data’s 10:30 a.m. ET release eyed 2.2 cents higher at $2.759/MMBtu at 10:29 a.m. ET. Following the release, the contract extended past the pre-release high of $2.772/MMBtu to a fresh high at $2.792/MMBtu and traded last 4.9 cents higher at $2.786/MMBtu.

In the East, inventories were up 20 Bcf on the week at 243 Bcf, or 29.8% below the year-ago level. Storage levels in the Midwest were up 19 Bcf at 240 Bcf, or 54.1% below the year-ago level. In the Mountain region, storage levels were up 6 Bcf on the week at 92 Bcf, or 40.6% below the year-ago level, while in the Pacific region, storage levels were up 8 Bcf on the week at 195 Bcf, or 17.7% below the year-ago level. In the South Central region, where storage levels were up 36 Bcf, stocks are at a deficit of 35.9% to a year earlier.

Working gas stocks in the South Central region totaled 662 Bcf, with 204 Bcf in salt cavern facilities and with 458 Bcf in non-salt cavern facilities. Working gas stocks were up 14 Bcf in salt cavern facilities and up 22 Bcf in non-salt cavern facilities since the previous week.

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.

 

 

 

Working Gas in Underground Storage, Lower 48   Year Ago (05/04/17)   5-Year (2013-17) Average  
  May-04-2018 Apr-27-2018 net change (Bcf) implied flow (Bcf)   stocks (Bcf) % change stocks (Bcf) % change
East 243 223 20 20   346 -29.8 347 -30.0
Midwest 240 221 19 19   523 -54.1 398 -39.7
Mountain 92 86 6 6   155 -40.6 127 -27.6
Pacific 195 187 8 8   237 -17.7 246 -20.7
South Central 662 626 36 36   1033 -35.9 832 -20.4
  Salt 204 190 14 14   331 -38.4 252 -19.0
  Nonsalt 458 436 22 22   701 -34.7 580 -21.0
Total 1432 1343 89 89   2295 -37.6 1952 -26.6
             

Storage Report Summary:
Working gas in storage was 1,432 Bcf as of Friday, May 4, 2018, according to EIA estimates.

This represents a net increase of 89 Bcf from the previous week. Stocks were 863 Bcf less than last year at this time and

520 Bcf below the five-year average of 1,952 Bcf. At 1,432 Bcf, total working gas is within the five-year historical range

 

05/02/2018: June Gas Pressured by Bearish Fundamentals Overnight

May 2nd, 2018

After ending the prior session with a 3.9-cent gain at $2.802/MMBtu, NYMEX June natural gas futures lost footing overnight ahead of the Wednesday, May 2, open, amid overriding fundamental weakness. At 10:45 a.m. ET the contract was 4 cents lower at $2.76/MMBtu.
Natural gas inventories are expected to begin rebuilding after a prolonged withdrawal season that continued throughout much of April, which is typically considered the first month of injection season. Storage levels have drawn lower by 73 Bcf thus far in April, leaving total working gas stocks at 1,281 Bcf, or 897 Bcf below the year-ago level and 527 Bcf below the five-year average of 1,808 Bcf as of the week ended April 20.
For the next storage report week ended April 27 that is due out from the U.S. Energy Information Administration at 10:30 a.m. ET on Thursday, May 3, preliminary estimates call for builds spanning the upper 40s Bcf to the upper 50s Bcf. That would compare with a 68-Bcf prior-year injection and a 69-Bcf five-year-average addition.
Anticipated weather and production levels feed support for a healthy pace of inventory rebuilding going forward.
The National Weather Service sees above-average temperatures gripping a majority of the country through both the six- to 10-day and eight- to 14-day periods. Average temperatures scattered over parts of the eastern U.S. and Gulf Coast in the shorter-range view shrink in scope in the extended period to be contained to a few areas of the east-north-central U.S. and the southern tip of Texas, as below-average temperatures initially confined to Michigan and southern Texas eventually disappear from the outlook.
Predominantly warmer weather should erase demand for heating, while a ramp-up in cooling demand should be met by ample supply as rig count data supports outlooks for an increase in natural gas production.
Analysts with the American Gas Association said builds through the injection season should drive inventories to between 3.5 Tcf and 4.0 Tcf by the end of October.

04/27/2018: June Natural Gas Slips

April 27th, 2018

Taking the lead from the May gas contract that rolled off the board in the prior session with a 3.5-cent gain at a finish at $2.821/MMBtu, NYMEX June natural gas futures had a weak showing overnight ahead of the Friday, April 27, open, as the market looked beyond significantly depleted inventories toward what is expected to be a healthy pace of storage rebuilding going forward. At 10:05 a.m. ET the contract was 5.1 cents lower at $2.788/MMBtu.
Natural gas inventories continued to draw lower three weeks beyond the typical start of injection season, with the latest storage data from the U.S. Energy Information Administration outlining an 18-Bcf withdrawal for the week ended April 20. That bested the full range of estimates coming into the day, and defied both the 71-Bcf prior-year injection and the 60-Bcf five-year average build. Total working gas stocks were left at 1,281 Bcf, or 897 Bcf below the year-ago level and 527 Bcf below the five-year average of 1,808 Bcf.
Increased heating demand relative to historical averages is seen to have allowed for the continued storage erosion in the recent inventory report week, but milder to warmer weather of late and in store associated with subdued demand suggests the possibility of the changeover from weekly stock draws to injections.
Warmer weather west of the Rocky Mountains and near-normal conditions on the eastern seaboard contributed to a 14% week-on-week decline in residential/commercial-sector demand during the week ended April 25 that combined with a 2% decline in both power burn and industrial-sector demand to drive a 6% reduction in total U.S. gas consumption, according to the EIA’s latest “Natural Gas Weekly Update.” Dry production was up 1% week over week.
Deflated demand combined with elevated production should allow for natural gas to flow more freely into underground storage facilities.
Weather forecasts are mixed, but the prevalence of milder to warmer weather alongside the higher low temperatures associated with below-average temperatures this time of year suggest diminished weather-related demand support as heating demand drops and significant cooling load is kept at bay.
The National Weather Service sees average to above-average temperatures encompassing a majority of the country through both the upcoming six- to 10-day and eight- to 14-day periods, as below-average temperatures settle over a narrow band of the west-central U.S. in the shorter-range view and over a large area of the central into eastern U.S. in the extended view.
Growing production implied by a rising rig count is expected to help natural gas inventories build by what is expected by the EIA to be the second largest volume of refill season net stock additions on record totaling about 2,416 Bcf, or 11.3 Bcf/d, by the traditional end of the injection season Oct. 31. The agency anticipates an end-of-October storage of 3,767 Bcf.

4-26-2018

April 27th, 2018

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas fell by 18 billion cubic feet for the week ended April 20. Analysts surveyed by S&P Global Platts had forecast a decrease of 12 billion cubic feet but on average over the last five years for the same week, inventories climbed by 60 billion cubic feet. Total stocks now stand at 1.281 trillion cubic feet, down 897 billion cubic feet from a year ago, and 527 billion below the five-year average, the government said.

https://www.marketwatch.com/story/natural-gas-prices-extend-gains-as-us-supplies-fall-a-bit-more-than-expected-2018-04-26

 

The forecast for overall natural gas demand next week moves into the “moderate” range as cooler, stormier weather moves into the Midwest. Cooler temperatures and showers head into the Northeast as well late this week. Next week sees warmer temperatures across most of the country.

Total U.S. stockpiles fell week over week to 41.2% below last year’s level and are now 29.1% below the five-year average.

https://247wallst.com/energy-economy/2018/04/26/natural-gas-price-rises-following-storage-report/

 

But wait, there’s more!

  • A pattern change will begin to develop across the central and eastern U.S. this weekend.
  • Highs in the 70s and 80s are expected in the Midwest and Northeast as May begins.

 

https://weather.com/forecast/national/news/2018-04-26-spring-warmup-early-may-midwest-northeast

Market Commentary 4-20-2018

April 20th, 2018

 

Currently,  the prompt month natural gas contract is trading at $2.71, up 5 cents.

Yesterday, the Natural gas market initially tried to rally towards the $2.78 level but found enough resistance in that general vicinity to turn around.

The $2.80 level is the major level that people are paying attention to, as it has been resistive in the past. It then cratered during the trading session,

breaking down to the $2.68 level. The EIA released a bullish inventory number though, so it did cause a significant bounce.

However, we are starting to roll over again, and it is only a matter of time before we reach a lower level. The $2.60 level has massive support underneath that should be a target.

The fact that we had such a bullish candle and then started to roll over again after the inventory number tells the market that there is still plenty of selling pressure.

This market will continue to be a “sell the rallies” situation, as the oversupply of natural gas continues to be an issue. Granted, the draw from inventory was higher than anticipated,

but we are getting towards the warmer for the year in North America, and that will put a massive amount of demand destruction for the market to think about into play.

A breakdown below the $2.60 level opens the door to the $2.50 level.

04/16/2018: May gas futures bolstered by extended withdrawal season

April 17th, 2018

After climbing by 4.9 cents to settle at $2.735/MMBtu ahead of the weekend, NYMEX May natural gas futures derived additional support overnight leading to the Monday, April 16, open, from the recent and anticipated continuation of storage erosion beyond the traditional start to the refill season April 1. At 9:20 a.m. ET the contract was 2.0 cents higher at $2.755/MMBtu.
For only the fourth time since 2010, natural gas withdrawals on a national level were reported in April, as the U.S. Energy Information Administration detailed a 19-Bcf drawdown from stocks in its latest storage data for the week ended April 6 that defied the five-year average and year-ago injections of 9 Bcf each. It left overall inventories at 1,335 Bcf, or 725 Bcf below the prior-year level and or 375 Bcf below the five-year average of 1,710 Bcf.
Weather during the storage report week is seen to have bolstered heating demand relative to historical averages.
Varied but ultimately supportive weather was observed in the subsequent days, fueling expectations for another atypical pull from stocks in the low 20s Bcf when the next inventory data that will cover the week to April 13 is released on Thursday, April 19.
Heat in the Pacific and southern regions combined with cold in the northern regions to drive both heating and cooling demand during the week ended April 11, much of which will be reflected in the upcoming storage report period. A 4% week-on-week gain in power burn and a 14% increase in residential/commercial-sector demand contributed to a 7% uptick in total U.S. gas consumption during the week in review, according to the EIA’s latest “Natural Gas Weekly Update.”
Weather conditions moderate in the coming weeks and months, however, likely keeping demand subdued and limiting upside momentum for futures.
Revised National Weather Service forecasts show below-average temperatures encompassing the fringes of the West and nearly the entire eastern two-thirds of the U.S. in the six- to 10-day period, but shrinking in scope to be contained to much of the mid-Atlantic, the lower tier of the Midwest and most of the South in the eight- to 14-day period.
Average to above-average temperatures initially confined to Florida, a few patches of the central U.S. and a majority of the West will eventually overtake the Northeast, the balance of the mid-Atlantic, much of the Midwest and more areas of the South.
Further out, forecasters point to warmer-than-normal weather over a large part of the U.S. from April through June.
Weather as projected will likely erase lingering natural gas demand for heating ahead of the onset of significant cooling load associated with the summer heat, facilitating the onset of the injection season as natural gas is allowed to flow more freely into underground storage facilities.
A rising rig count portending production growth feeds the possibility of a healthy pace of storage rebuilding in store. The latest Baker Hughes data show an increase of five rigs in the U.S. total rig count for the week to April 13 to 1,008 rigs.
The EIA sees natural gas inventories climbing to 3,767 Bcf by the traditional end of injection season Oct. 31, with injections totaling about 2,416 Bcf, or 11.3 Bcf/d, the second largest volume of refill season net injections on record.