Weather, holiday week’s move Spot gas prices down as futures rise with hope of cold

Weekly cash natural gas prices fell as demand boosted by Northeast storms and pipeline restrictions did not match prevailing unusually mild weather, while futures gained an outlook for January’s arrival of wintry weather.

NGI’s Weekly Spot Gas National avg. for the period 18–22 December fell 5.5 cents to $2,335.

Nymex January natural gas futures settled at $2.610/MMBtu at the close of the regular session on Friday, up 3.8 cents day/day and above last week’s close of $2.491.

The fight was real for natural gas bulls as they tried to hold on to gains accumulated during a four-day winning streak that hit a wall on Tuesday when revised forecasts erased cooler, favorable weather.

Later in the week, inventory withdrawals that exceeded market expectations and a forecast of cooler weather for the New Year contributed to the gains.

Meanwhile, ahead of what could be a cold hold, weekly physical gas prices varied by region as temperatures fluctuated, but were mostly unusually mild, pushing the national average down.

Cold weather and pipeline restrictions plagued the Southeast region earlier in the week and pushed Northeast values ​​higher on Wednesday. This promoted the weekly Southeast Regional Avg. 38.5 cents on $3,070 a Northeast Regional Avg. Up 43.5 cents at $3,120.

The largest decline was in West Texas, where pipeline restrictions limited the flow of natural gas from the region and mild weather provided little support for local demand. Permian El Paso was among the region’s top losers as the weekly average fell 66.5 cents to $1,150. It traded as low as negative 20.0 cents.

Futures Find Footing

Earlier in the week of December 22, natural gas futures managed to extend a relief recovery into the fourth session. Prices rose 1.2 cents on Monday, with gains attributed largely to profit-taking from speculators.

Analysts at Gelber & Associates said Monday that the rally was “somewhat expected given the relentless decline in prices for several weeks.”

The increase stalled on Tuesday as revised weather forecasts maintained more seasonable weather. but national demand is still expected to be “exceptionally light compared to normal”, according to NatGasWeather.

The U.S. Energy Information Administration (EIA) reported an 87 Bcf draw on natural gas inventories on Thursday, restoring growth.

NGI modeled a draw of 75 Bcf ahead of Thursday’s EIA storage print. That compares to a five-year average of 107 Bcf and 82 Bcf a year earlier.

Larger-than-expected inventory draws reduced inventories to 3,577 Bcf. The drawdown left a surplus of 280 Bcf to the five-year average of 3,297 Bcf, and the stockpile level rose above the previous year’s level of 3,337 Bcf.

“Still, the weather is more important than the news,” Price Futures Group senior analyst Phil Flynn told NGI on Thursday.

Gelber said the National Weather Service’s (NWS) Climate Prediction Center has updated its seasonal temperature outlook for the coming winter months. “The forecast has changed little since its previous release, predicting near-normal temperatures for small parts of the South and Southeast, with the lower half of the lower 48 just as likely to see above or below normal temperatures this winter.”

The firm said that while the NWS forecast showed above-normal temperatures likely for the rest of the country, other two-week horizon models shifted significantly cooler for multiple regions on Friday, “suggesting that January may see higher demand than previously expected.”

NatGasWeather added that “the forecast period that matters most going forward is January. 5-15. Weather data favors cooler systems coming into the United States during this period.

That could provide “the next best chance that patterns will finally be cool enough to make an impact,” the firm said. However, “Unless cooler/bluer weather maps arrive in early January, natural gas inventory surpluses could increase further.”

Preliminary estimates provided to Reuters for filing data for the week ended Dec. 22 ranged from withdrawals of 65 Bcf to 87 Bcf, with an average decline of 73 Bcf. That compares with a draw of 195 Bcf a year earlier and a five-year average decline of 123 Bcf.

The surpluses could increase to 350-400 Bcf after factoring in the next three EIA reports, NatGasWeather said.

Friday money movements

Physical gas prices in centers across the United States were cut on Friday to a Saturday-Tuesday package that was revised to accommodate flows over the Christmas holiday weekend.

Rubin said early Friday that a weather-driven collapse in natural gas demand leading up to the Christmas holiday weekend, a surge in Texas wind production — at 2,008 MW according to its state grid operator — and growing gas storage gluts “combined to create steep spot market risks.”

Prices in West Texas fell into the negative in some places as low weekend/holiday demand and mild weather collided. Tea W.TX/SE NM Regional Avg. down $1,185 day/day, with average trades ranging from minus 25.0 cents to 30.0 cents.

in the northeast, Algonquin CitygateE trades fell $2,260 to average $1,875, contributing to a $1,645 decline Northeast Regional Avg. to $2,065.

Ahead of the upcoming New Year holiday, NGI noted on Wednesday that next-day gas deals on Thursday, December 28 cover the flow from Friday, December 29 to Sunday, December 31. On Friday, December 29, the following day, gas deals would take place for two days from Monday, January 1. 1-Tuesday, Jan. 2, 2024.

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