The onset of fall weather and demand uncertainty weighed down weekly cash prices.
NGI’s Weekly Spot Gas National Avg. for the Sept. 8-11 period fell 22.5 cents to $1.890.
Cooler conditions took hold during the week, particularly on Monday, when an early snowstorm blew into the Rocky Mountains and sent cool shots across much of the nation’s midsection. This offset continued extreme heat farther west.
The National Weather Service noted that intense heat continued in the Southwest and California during the week, but temperatures dropped to winter-like levels across the Rockies, and the cold front gradually pushed east, bringing comfortable temperatures and chilly rains to swaths of the central United States, minimizing cooling demand.
Cash prices could remain under pressure the rest of September, NatGasWeather said, as fall temperatures settle in across much of the Lower 48, leaving many markets in a limbo of sorts where demand is light for cooling and heating needs are still a few weeks away.
Over the second half of September, the forecaster said, “widespread ideal highs of 70s and 80s rule much of the country for light national demand. There will still be cooler bouts at times across the northern United States, with highs of 50s and 60s, and locally hotter conditions” over the southern part of the country, with highs in the 90s. “But overall, a rather bearish pattern…It would take much hotter or colder trends to flip weather sentiment bullish.”
Natural gas futures failed to find momentum during the week, as containment concerns mounted and weather-driven demand started to fade.
With the recent chill in the Rockies and parts of the Midwest as a foundation, forecasts for cooler temperatures across much of the eastern half of the country in late September left markets to mull the likelihood of diminishing weather-driven cooling demand.
Bespoke Weather Services also said the Lower 48 is moving into a period when heat can drive cooling demand in parts of the country, and potentially, cold weather can fuel heating needs. But it said such demand often proves short-lived as temperatures usually level off this time of year, leaving comfortable conditions and easing both cooling and heating demand.
The weather outlook weighed on markets throughout the week.
Mounting storage levels also helped to keep futures in check.
The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 70 Bcf into Lower 48 gas stocks for the week ending Sept 4, versus a five-year average of 68 Bcf. The build increased inventories to 3,525 Bcf, well above the year-earlier level of 2,997 Bcf and above the five-year average of 3,116 Bcf.
In a separate report this week, EIA forecasted that inventories would approach 4.0 Tcf by the end of October, 6% above the five-year average and a level that would present containment challenges.
Bespoke noted that liquefied natural gas (LNG) has begun to rebound in September – after a coronavirus-induced slump over the summer – and a continued recovery could prove vital to avoid storage overflows.
“Storage remains at record levels in some regions,” the forecaster said, “so the higher LNG volumes will need to sustain themselves to steer us clear of a containment scenario, something that gets even more dicey if weather continues to look tame.”
The October Nymex contract settled at $2.269/MMBtu on Friday, down 5.4 cents day/day. The front month declined three out of four days during the Labor Day holiday-shortened trading week.
Spot gas prices moved lower across much of the country Friday.
Maxar’s Weather Desk said the week-ahead forecast was undergoing “cooler changes across the eastern half of the United States, with the largest changes focused in the Midcontinent,” potentially resulting in below-average temperatures overall.
While summer heat continued in California and the Southwest, wildfires raging across large areas of the West Coast on Friday showed “no signs of slowing,” Maxar noted, and “wildfire smoke could remain a limiting factor for temperatures.”
In California, SoCal Citygate declined 38.5 cents to $1.855.
The wildfire smoke that was blanketing skies out West, however, was limiting solar generation and could result in notable near-term increases in natural gas demand to offset the alternative power resource. The California Independent System Operator said solar generation in recent days was off about one-third from normal summer levels.
Looking ahead, AccuWeather Inc. said Tropical Storm Paulette may become a hurricane in the next few days as it approaches Bermuda. The forecaster also is tracking several more potential storm systems in the Gulf of Mexico. Already this season, 17 storms have formed across the Atlantic, the fastest pace on record, according to the National Hurricane Center.