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James Hyerczyk
Natural Gas

Natural gas prices are edging higher on Wednesday, shortly before the regular session opening. The move is helping to offset some of the previous session losses. The price action seems to be suggesting that traders have already moved on from the negative impact on demand from Tropical Storm Beta and a dip in demand for liquefied natural gas.

At 11:44 GMT, December natural gas is trading $3.153, up $0.019 or +0.61%.

Despite the early strength, there are still concerns about storage containment issues that could weigh on prices over the near-term.

LNG Demand Updates

According to Natural Gas Intelligence (NGI), scheduled feed gas flows to U.S. LNG terminals dropped more than 20% from Friday to Monday, and declined further Tuesday, dipping below 4.0 Bcf after topping 7.0 Bcf for several days last week.

Annual fall maintenance work at the Dominion Energy Cove Point LNG terminal and a resulting hit of more than 700 MMcf/d of feed gas deliveries to the facility, coupled with Beta’s arrival on Tuesday, hindered LNG at a time when markets are looking for it to fill a demand void left by fading summer weather over parts of the Lower 48, NGI wrote.

Additionally, with Beta making landfall along the Texas coast, “demand in the South Central region is likely to remain deeply depressed” moving into the middle of the week, “preventing the October contract from rebounding significantly” and putting “downward pressure on November-March prior to this week’s storage report on Thursday,” EBW Analytics Group said.


Short-Term Weather Outlook

According to NatGasWeather for September 22 to September 28, “Heavy rain will continue along the Gulf Coast as Tropical Storm Beta stalls. High pressure will rule much of the rest of the U.S. with comfortable highs of upper 60s to 80s. Hotter exceptions continue across the Southwest with 90s to 100s, while cooling rains arrive into the Northwest Wednesday through Thursday. Tropical system Teddy will get close enough to the Northeast Coast mid-week for gusty winds and minor cooling. Overall, national demand will be low.”

Short-Term Outlook

Looking ahead to Thursday’s weekly U.S. government storage report, traders are anticipating another robust number for the week-ending September 18. Last week’s figure took out the high end of expectations. Another massive build in this week’s report could all but ensure storage would exceed 4.0 Trillion Cubic Feet (Tcf) before the winter heating season begins.

The Schork Report’s analysts said Tuesday it was “a forgone conclusion” that the Lower 48 would not only exceed 4.0 Tcf  – widely viewed as a glaring warning sign of containment woe – but would enter winter “with a record amount of supply in the ground.”

For a look at all of today’s economic events, check out our economic calendar.

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