A “recovering” late January forecast “spur[red]…” the NYMEX gas “recovery” yesterday, Eli Rubin, an energy analyst at EBW Analytics Group, outlined in an EBW report sent to Rigzone by the EBW team on Tuesday.
“The February contract netted a 24.0 cent gain yesterday – reversing Friday’s 23.8 cent decline – as weather forecasts swung back in a colder direction to close January,” Rubin said in the report.
“Speculators rotating out of the heaviest short positioning in 13 months may amplify upside, while yesterday’s bounce reset short-term technicals in a bullish direction,” he added.
“Today may be the mildest day nationally until late February. Week 2 could see weekly heating demand soar 53 gHDDs and more than 100 billion cubic feet as blowtorch weather flips colder,” he continued.
“The Week 3 forecast added 15 gHDDs in the past 24 hours. Other meteorologists also point to chances for reloading cold risks in early February,” Rubin stated.
Rubin went on to note in the report that daily LNG feedgas nominations “suggest a record high at 20.4 billion cubic feet per day”. He added, however, that “soaring storage surpluses to year-ago and five-year average levels, and likelihood that the market will manage the coldest days of winter next week without massive disruption, suggest the near-term relief rally may wobble and retreat in the most-likely scenario”.
The EBW report highlighted that the February natural gas contract closed at $3.409 per million British thermal units (MMBtu) on Monday. It outlined that this marked a 7.6 percent increase from Friday’s close.
In Tuesday’s report, EBW predicted a “test higher and relent” trend for the NYMEX front-month natural gas contract price over the next 7-10 days and a “rebound and retreat” trend over the next 30-45 days.
In an EBW report sent to Rigzone on Monday by the EBW team, Rubin stated that the NYMEX front-month gas contract “plunged to $3.131 intraday on Friday as support disintegrated, taking out key technical support at $3.25 per MMBtu to open further downside risks”.
“With Henry Hub physical prices retreating to just $2.84 per MMBtu over the balmy weekend, January-to-date Henry Hub has averaged a mere $3.28 per MMBtu,” he added.
“While some meteorologists indicate chances for a near-term gHDD gain, DTN’s Week 3 loss of 16 gHDDs since Friday suggests further loss of fundamental support. The storage surplus vs. five-year normal is poised to rise towards 185 Bcf into the end of January,” Rubin continued.
Rubin went on to predict in that report that “daily LNG feedgas may hit a new record high today” and added that “a building speculator short position may raise chances for a near-term price pop higher”.
“The longer-term outlook into spring may see more substantial fundamental support with weak March weather comps and low prices driving coal-to-gas fuel switching,” Rubin said in this report.
“Nonetheless, deteriorating weather and building storage surpluses suggests further weakness cannot be ruled out,” he noted.
In this EBW report, EBW highlighted that the February natural gas contract closed at $3.169 per MMBtu on Friday. This marked a 7.0 percent drop from Thursday’s close, the report outlined.
In Monday’s report, EBW predicted an “attempt to rebound” trend for the NYMEX front-month natural gas contract price over the next 7-10 days and a “rebound and retreat” trend over the next 30-45 days.
EBW states on its website that it provides independent expert analysis of natural gas, electricity, and crude oil markets. The company highlights on its site that it has teamed up with DTN, which it describes as “the global industry leader known for hazardous weather detection and prediction, forecast modeling, decision analytics, GIS and interactive mapping”.
Rubin is described on EBW’s website as “an expert in econometrics, statistics, microeconomics, and energy-related public policy”.
“He is instrumental in designing the algorithms used in our models, and in assessing the potential discrepancies between theoretical and practical market effects of models and historical results,” the EBW site goes on to state.
To contact the author, email andreas.exarheas@rigzone.com
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