Natural Gas prices rose early in the session on Friday, aided by forecasts for more heat in the near-term future, but the gains faded throughout the session, leaving the market with only moderate gains at the close. Natural Gas futures for October finished at $3.866 on Friday, up $0.022 or 0.57 percent. Weather models have reversed in a dramatic way, according to Natural Gas Intelligence (NGI), from looking a little colder for late August.
The European 15-day outlook added roughly 12 gas-weighted degree days (GWDD) due to hotter variations witnessed in the eastern half of the country, according to Bespoke Weather Services. The La Nina base state is still in place, which means above-average temperatures, especially in the second half of the summer. According to Bespoke, this looks to be the main cause of the adjustments, which have put the final week of August near to a weekly record in terms of GWDDs for those days.
Weather models predicted a cooler air mass flowing into the Midwest and East by next Friday, according to Maxar’s Weather Desk (August 27). However, it is now projected to bring temperatures closer to normal, rather than the previously forecasted somewhat below-normal temperatures, according to NGI.
According to NGI, after maintenance events at various U.S. liquefied Natural Gas (LNG) facilities are completed, export demand is likely to fully recover. In addition, two LNG production units are slated to go up in the coming months, pushing export demand past previous highs. On the supply side, opinions differed on how much production growth the market could expect. Natural Gas analyst Eric Fell of Wood Mackenzie believes output is expanding faster than the market realises. He pointed out that the difference between what Wood Mackenzie’s supply/demand storage model predicts and what the EIA reports has widened dramatically in recent weeks.