Chilly Start to the Week, Then Warming

Written by on May 11, 2020 in NatGasWeather - No comments

Monday, May 11: June’20 nat gas futures continued to selloff Friday, closing 7¢ lower at $1.83. Prices spiked to reach $2.15 last Tuesday on the heels of a TETCO gas pipeline explosion in Kentucky, then went into freefall, losing more than 30¢ to $1.83 by Friday’s close. Also of considerable interest, last Friday’s Baker-Hughes weekly rigs report showed another hefty drop of 33 oil rigs, although not as big of a decline compared to previous weeks, but still portends further losses in associated nat gas production to come. However, last Thursday’s EIA weekly storage report was a hefty +109 Bcf and again notably larger than the 5-year average. This suggests while nat gas production continues to decline, it’s been more than offset by demand destruction from COVID-19. Essentially, further nat gas production losses are going to be needed if the balance is to tighter. Either that or stronger demand will need to return to the industrial and commercial sectors. Regarding the weekend weather data, only slight changes with the GFS losing 5 TDD’s (HDD/CDD) for the 15-day forecast compared to Friday’s data, while the European model lost a mere 1 TDD. Overall, the timeline of major weather features to impact the US into late May held, starting with a chilly late season cool shot impacting most states east of the Rockies to open the week, coldest across the Midwest and Northeast. This will be followed by perfect highs of 70s arriving from Chicago to NYC Thu-Fri and lasting into the foreseeable future. As the northern US becomes ideal after the early week cool shot, the southern US will become very warm to hot as high pressure strengthens. This will bring an increase in coverage of mid-80s to 90s from Texas to the Mid-Atlantic Coast, but still not quite hot enough to intimidate. Once the southern US gets a little hotter with greater coverage of 90s, weather sentiment will flip from bearish to bullish. This needs close watching as it wouldn’t take much of a hotter trend to bring a rapid increase in forecast CDD’s.

Chilly conditions Monday-Tuesday east of the Rockies for stronger than normal demand. Coldest Midwest and Northeast but rather comfortable Texas to the Southeast with 70s to low 80s.

 

Major pattern change starting late this week as Chicago to NYC warms into the 70s but getting very warm Texas to the Southeast

 

Highs late this week become very nice Chicago to NYC but very warm Texas to the Southeast.

 

15-day Forecast HDD/CDD totals for GFS vs European model. Both are very similar and not nearly hot or cold enough from the middle of this week onward.

Leave a Comment