Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Natural Gas: Spring Chill Makes For Bewildering Trade

By Investing.com (Barani Krishnan/Investing.com)CommoditiesApr 15, 2021 01:29PM ET
www.investing.com/analysis/natural-gas-spring-chill-makes-for-bewildering-trade-200573165
Natural Gas: Spring Chill Makes For Bewildering Trade
By Investing.com (Barani Krishnan/Investing.com)   |  Apr 15, 2021 01:29PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

To weather watchers in the gas trade, the past week or two must have felt like something right out of the 1970s rock classic “One-Way Wind”, where Arnold Muhren of Dutch band, Cats asks bewilderedly: “Why you blow the cold every day ... Tell me what are you trying to say?”

For some, there hasn’t been much sense in the sudden turn in US Northeasterly winds over the past couple of weeks which have brought unexpected chill to the region, versus earlier forecasts of warmth.

Natural Gas Daily
Natural Gas Daily

Bespoke Weather Services said in a post on the naturalgasintel.com portal on Wednesday that cooler trends had grown more entrenched over the previous 24 hours, with both the American and European forecast models adding 10-12 GWDD, or gas-weighted degree days, over the next two weeks.

The bullish shift developed “thanks to more chill in the Midwest and East…It remains difficult for weather to move the needle much at this time of year, but double-digit GWDD changes in a 24-hour period are noteworthy,” Bespoke said. “This generally equates to a lot of 50s highs/30s lows in places like the Midwest,” driving heating demand.

It is against this backdrop that another weekly update on US natural gas storage is due from the Energy Information Administration at 10:30 AM ET (14:30 GMT) today. 

A consensus of estimates from industry analysts tracked by Investing.com shows the EIA is likely to report an addition of 67 bcf, or billion cubic feet, to storage for the week ended Apr. 9. 

That would be in line with the 68 bcf injection seen during the same week a year ago, although it will also be more than 2-/2 times the five-year (2016-2020) average injection of 26 bcf.

It would also be 47 bcf above the 20 bcf injection into storage for the week ended Apr. 2.

Typically, a higher injection into storage indicates that more than adequate gas was produced that week versus utilities’ needs. After burning whatever is required for heating and power generation, utilities will pump the balance into salt caverns and other underground storage facilities.

Odd Situation: Cooler Winds But Fewer HDDs

What’s odd about the forecast for the 67-bcf build for last week though is that the official number of HDDs, or heating degree days, during the week were lower despite the colder winds in the Northeast, the largest gas-driven heating market in the United States.

HDDs measure the number of degrees that a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand for heating homes and businesses.

According to data provider Refinitiv, there were 43 HDDs last week, compared with the 30-year norm of 90 HDDs.

Thus, this week’s near 4% rally in gas futures on the New York Mercantile Exchange’s Henry Hub may not be defensible if the storage number were to come in any higher, said some market watchers.

Average 5-Year Gas Stockpiles Seen Up 1%

Gelber & Associates, a Houston-based gas markets consultancy, said in a note issued to its clients and shared with Investing.com on Wednesday:

“As colder-than-normal temperatures continue to make an appearance towards the latter half of the two week weather forecast, additional expectations of weather-driven demand are allowing for the upward momentum to continue.” 

“If the injection into natural gas storage is larger than market expectations, it should put parrying pressure on prices.”

If analysts are on track with their 67-bcf estimate for last week, total stockpiles of gas in storage would rise to 1.851 tcf, or trillion cubic feet—almost 1% over the five-year average and 11.3% lower than the same week a year ago.

If correct, this would push storage over the five-year average for the first time since the February freeze in Texas and the Central US that resulted in a massive spike in heating needs and sharp deficit in gas stockpiles.

On the LNG front, the turn in spring weather combined with higher exports of liquefied natural gas to Mexico “has been enough to promote a much better supply/demand balance the last few weeks,” Bespoke Weather Services said.

LNG feed gas levels exceeded 11 bcf on Wednesday, data showed. Volumes have held near or above that threshold for a month, bolstered by ongoing demand for US exports from both Asia and Europe.

EBW Analytics Group said demand for natural gas this week has also been aided by a steep decline in wind output in Texas. “This required heavy utilization of gas-fired generating units,” the firm said.

Technicals Show Natural Gas A 'Strong Buy'

Technical charts of natural gas, however, suggest more upside in the near term.

Should the market extend its bullish trend, a three-tier Fibonacci resistance is forecast, first at $2.653, then $2.666 and later at $2.688.

In the event of a turnaround, then a three-stage Fibonacci support is expected to form, first at $2.609, then $2.596 and later at $2.574.

In any case, the pivot point between the two is $2.631.

As with all technical projections, we urge you to follow the calls but temper them with fundamentals—and moderation—whenever possible.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

Natural Gas: Spring Chill Makes For Bewildering Trade
 

Related Articles

Natural Gas: Spring Chill Makes For Bewildering Trade

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (8)
Richard Daroi
Richard Daroi Apr 18, 2021 6:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Mr Baraniis the coldest weather in Europe have impact on us ng?
Suvidha Talashilkar
Suvidha Talashilkar Apr 15, 2021 7:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sir what is your view it will down
chhoti maya
chhoti maya Apr 15, 2021 12:17PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
but as of now most of area weather normal to warmer and some area winter will be end. and this phenomena inventory will again built-up so price only impact due to other energy crude oil price pull from188-200 but I think it should be down 171-166
Barani Krishnan
Barani Krishnan Apr 15, 2021 10:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hi all, the EIA reports an injection of 61 bcf for the week ended April 9, versus market expectations for 67 bcf
Mohammad ASAD Ali
Mohammad ASAD Ali Apr 15, 2021 8:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks for all your time, efforts and continuous support Be Safe, Take care and have a nice time with your family, friends and loved ones
Barani Krishnan
Barani Krishnan Apr 15, 2021 8:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks much, Mohammad ASAD Ali. Wishing you and yours good luck and safe times as well.
jay prakash Rajak
jay prakash Rajak Apr 15, 2021 7:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks
Barani Krishnan
Barani Krishnan Apr 15, 2021 7:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You're welcome.
Cornelia Gaitanaru
Cornelia Gaitanaru Apr 15, 2021 7:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
cine ma suna cu nr ascuns?
VELA MNGOMEZULU
VELA MNGOMEZULU Apr 15, 2021 7:32AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email