Natural gas futures recovered most of their losses from late last week in early trading Monday, rising double digits as analysts continued to see indications of domestic prices responding to conditions in overseas markets. After settling 24.8-cents lower on Friday, the November Nymex contract was up 21.7 cents to $5.836/MMBtu at around 8:45 a.m. ET.
Rallying prices in after hours trading early Monday appeared to coincide with a move higher in European prices, according to Bespoke Weather Services.
“Things continue to be volatile, and if you blink, you likely miss a move,” Bespoke said. “Our stance remains ‘slightly bearish,’ but keeping in mind that there can, and likely will be, wild moves in both directions until we reach the time when the bearish weather pattern starts taking on more importance in price action, which may not occur for another week or so.”
The firm lowered its projected gas-weighted degree day total for October as a whole based on weekend changes in the weather data, a result of new days rolling into the back end of the projection period that “remain very warm/low demand.”
The forecast showed nearer term demand gains, but only as a result of higher expected cooling demand, “something which will become meaningless in another week to 10 days at most,” Bespoke said. “Putting it all together, it remains a very bearish weather pattern.”
EBW Analytics Group analysts similarly observed warming trends in the weekend weather data, with “enough rare mid-October cooling demand” in the forecast to “fully offset” losses in heating demand nationally. However, despite an “extreme pattern” the overall net increase demand remained “relatively modest.
Elsewhere, in the domestic market, the EBW analysts noted continued weakness in liquefied natural gas feed gas demand.
“Still, European gas markets are a key barometer for Nymex gas: this morning’s” Dutch Title Transfer Facility (aka TTF) “front-month’s gain of 7.2% contributed to the Nymex November contract’s increase,” the analysts said. “The November contract is pressing higher this morning, but very weak short-term fundamentals remain a key source of downward pressure that could help lead a highly volatile market lower.”
Meanwhile, looking ahead to this week’s U.S. Energy Information Administration (EIA) storage report, NGI’s model is predicting a 114 injection for the week ended Oct. 1. A triple-digit build, if realized, would easily exceed historical norms for the period.
Last year, EIA recorded a 75 Bcf injection for the similar week. The five-year average injection is 81 Bcf.
November Nymex crude oil futures were up 42 cents to $76.30/bbl at around 8:45 a.m. ET.