In an EBW Analytics Group report sent to Rigzone by the EBW team today, Eli Rubin, an energy analyst at the company, offered an explanation for the August natural gas contract price drop on Monday, which the report highlighted came in at 6.7 percent.
“The August contract dropped 24.0 cents yesterday to $3.325 [per million British thermal units/MMBtu] – returning nearly the entirety of last week’s gains and up just 1.1 cents vs. the Friday, July 11th close,” Rubin said in the report.
“Higher weekend production prints, inconsistent LNG, and milder weather sparked the move lower,” he added.
In the report, Rubin noted that “the 7.4 CDD [cooling degree day] retreat in Week 3 cooling demand over the past 24 hours added to bearish momentum, with a seasonal to cool eastern U.S. shedding 15 CDDs week over week hampering the sustainability of bullish chances”.
“Production readings may also show renewed strength next week, offering further downside risks,” Rubin warned.
Rubin also highlighted in the report that Henry Hub spot prices averaged $3.47 per MMBtu yesterday and added that “the next week will see the three hottest days of the summer”.
“A mid-teens Bcf (billion cubic foot) injection may help breathe life into bulls,” Rubin went on to state.
“Still, while volatility is probable over the next 7-10 days, the combination of overarching storage surpluses, strong production, and tropical risks may limit durable medium-term upside,” he added.
In a separate EBW Analytics Group report sent to Rigzone by the EBW team on Monday, Rubin highlighted that Friday’s $3.565 per MMBtu close “was a month to date high for the August natural gas contract”. Rubin went on to outline in that report that, on Monday, the contract was “returning most of last week’s gains amid strong weekend supply readings and milder weather forecasts from other widely followed meteorologists”.
“Daily variability may be amplifying this morning’s [Monday] downturn – a drop in daily CDDs Tuesday before adding 3.6 CDDs into the weekend and strong ERCOT wind before subsiding later this week,” Rubin stated in Monday’s report.
“LNG feedgas is also off this morning with inconsistent Corpus Christi intake but may rebound next week into the hottest weather of the summer,” he continued.
“Ultimately, fading heat, ample storage surpluses, hints of stronger production and hurricane risks may subdue NYMEX natural gas upside chances,” Rubin warned in the report.
“Searing heat later this week and a projected mid-teens Bcf injection for the last week of July may drive price volatility ahead of next week’s August contract final settlement first, however,” Rubin went on to state.
This report highlighted that Friday’s August natural gas contract close of $3.565 per MMBtu marked a 2.3 cent, or 0.6 percent, rise compared to Thursday’s close.
Rigzone contacted Corpus Christi LNG Terminal owner Cheniere Energy for comment on Monday’s EBW report. Cheniere declined to comment.
In its latest short term energy outlook (STEO), which was released earlier this month, the U.S. Energy Information Administration (EIA) cut its Henry Hub natural gas spot price forecast for 2025 and 2026.
According to its July STEO, the EIA sees the Henry Hub natural gas spot price averaging $3.67 per MMBtu in 2025 and $4.41 per MMBtu in 2026. The EIA’s previous STEO, which was released in June, projected that the Henry Hub natural gas spot price would average $4.02 per MMBtu this year and $4.88 per MMBtu next year.
Both STEOs highlighted that the Henry Hub natural gas spot price came in at $2.19 per MMBtu in 2024.
EBW Analytics Group provides independent expert analysis of natural gas, electricity, and crude oil markets, the company’s site states.
Rubin is an expert in econometrics, statistics, microeconomics, and energy-related public policy, the site adds, noting that 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”.
To contact the author, email andreas.exarheas@rigzone.com
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