Market gets ‘first taste of winter’ as natural gas futures rise early

Natural gas futures continued to rise in early trading on Wednesday as forecasts strengthened the onslaught of early winter cold that will sweep through the lower 48 over the weekend. The Nymex November contract was up another 4.3 cents at $3.014/MMBtu by 8:40 a.m. ET, after gaining 4.5 cents in the previous session.

Natural gas prices rose on Tuesday as forecasts gave the market a “first taste of winter”, NatGasWeather told clients early Wednesday. Prices could be “quite volatile” as the November contract expires by the end of the week, the firm noted.

As for overnight forecast trends, the US model added a few degree days of heating, according to the firm, while the European data set also added “minor” heating demand to the outlook.

The temperatures will lead to “very weak” demand nationally over the weekend, NatGasWeather said. “However, a freezing system will stall over the Rockies and Northern Plains over the next few days with rain, snow” and sub-freezing temperatures.

“This system will finally break free and move across the northern and central US late this weekend into next week” to provide “the first widespread subfreezing cold of the season that will boost national demand to strong levels,” NatGasWeather added.

Maxar’s Weather Desk similarly highlighted cooler trends for the six- to 10-day time frame, covering Monday through November 3.

The cooler outlook comes “as the cold front picks up speed again in its advance across the south and east,” Maxar said. “A colder air mass follows the front, with early highs and highs along the East Coast giving way to well below normal temperatures” for the eastern two-thirds of the lower 48.

“With the coldest forecast, lows will drop into the 20s in the Midwest and into the 30s to 40s from the south to the East Coast.”

However, further into the 11- to 15-day time frame, “the pattern starts to warm up again,” Maxar said.

The eastern half of the lower 48 will see a rise in temperatures during the period, with the forecaster predicting “a return to normal in the Northeast and above normal across the southern half by mid-season.”

With natural gas futures on a long losing streak, it was “no surprise” that prices rose this week, and according to NatGasWeather, the cold weather in the forecast helped pull natural gas out of its slump.

“We expect prices to react more strongly higher to the coming cold shot if another one follows,” the firm said.

Meanwhile, an above-average seasonal injection could be in store for Thursday’s US Energy Information Administration (EIA) report.

NGI models an injection of 79 Bcf for the week ending October 20. That would beat both the 61 Bcf a year earlier and the 66 Bcf five-year average.

Post Market gets ‘first taste of winter’ as natural gas futures rise early appeared first on Natural gas intelligence

Leave a Comment