In an EBW Analytics Group report sent to Rigzone by the EBW team on Thursday, Eli Rubin, an energy analyst at the company, highlighted that the February natural gas contract “collapsed” yesterday.
Rubin outlined in the report that the February natural gas contract fell to $3.068 per million British thermal units (MMBtu) on Wednesday “on (i) chances for a dissipating Alaska ridge opening milder February risks and (ii) a Webber Research report that Golden Pass LNG Trains 2-3 may be delayed until 2027”.
“Weakness was compounded by volatility: yesterday’s $3.120 close is within 1.1 cents of Friday’s low,” Rubin added.
In the report, Rubin pointed out that daily LNG demand “dropped to a two month low” yesterday, “mitigating weather driven Henry Hub spot price upside to clear at $3.12 per MMBtu”. He also noted that “LNG could jump 3.5 billion cubic feet per day – adding to a 12.4 billion cubic foot per day increase in weather-driven demand into Tuesday”.
Rubin went on to outline in the report that “consensus projections” for the U.S. Energy Information Administration’s (EIA) next weekly natural gas storage report – which is scheduled to be released later today and will include data for the week ending January 9 – “are for an 87-91 billion cubic foot draw”.
“The bigger story is likely to be rising physical market strength into a cold Martin Luther King holiday weekend,” Rubin added.
“Healthy storage surpluses suggest NYMEX futures may try to continue to look past near term cold, however,” he continued.
The EBW report highlighted that the February natural gas contract closed at $3.120 per MMBtu on Wednesday. It outlined that this marked a 29.9 cent, or 8.7 percent, decrease from Tuesday’s close.
In Thursday’s report, EBW predicted a “mixed signals” 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.
Rigzone has contacted Golden Pass LNG for comment on EBW’s report. At the time of writing, Golden Pass LNG has not responded to Rigzone.
In an EBW report sent to Rigzone by the EBW team on Wednesday, EBW highlighted that the February natural gas contract closed at $3.419 per MMBtu on Tuesday. EBW outlined in the report that this marked an increase of 1.0 cents, or 0.3 percent, from Monday’s close.
“The February contract rose 1.0 cents yesterday to close within 0.6 cents of $3.413 for the third time in four trading days as natural gas searches for equilibrium following price volatility since Thanksgiving,” Rubin noted in that report.
“The short term market remains caught between increasing cold into late January and simultaneously rising storage surpluses,” he added.
In this report, Rubin said “forecasts trended colder for Weeks 2 and 3 to bolster near-term support”. He added, however, that “Henry Hub spot prices at $3.04 per MMBtu remain at a steep discount to the February contract”.
“Henry Hub should be less affected than regional basis during next week’s cold shot, giving bears an opening to drive prices lower,” Rubin warned.
Rubin went on to highlight in that report that daily LNG feedgas was down. He added that the market “may ‘look past’ upcoming cold” and stated that “rising storage surpluses, despite a cold back half of January, may give the impression of a fundamentally oversupplied supply/demand balance to offer bearish risks later this month”.
In Wednesday’s report, EBW also predicted a “mixed signals” 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.
To contact the author, email andreas.exarheas@rigzone.com
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