The November NYMEX front month contract jumped up to a $3.00 US/mm high (a level the contract last saw back in July), but then traded down to $2.91, up 2 cents on the day. the winter strip also made a new local high but drifted back down during the day to only up 3 cents to $3.24.
This market feels like it is catching it’s breath before deciding on another direction.
On the bullish side, production has still not ramped up yet in preparation for the approaching winter heating season. LSEG reported that October gas output has fallen to 100.5 bcf/day for the Lower 48 US states (compared to 101.8 bcf in September). Normally producers are increasing output at this time of the year, but that hasn’t happened yet.
On the bearish side, current demand for gas is still relatively low (mild temperatures and power outages) and there is still 6% more gas in storage than the 5 year average.
The wildcard is the storm system in the Carribean Sea, which has a 40% chance of becoming a cyclone in the next 7 days. If it does become a hurricane and if the path is toward LNG facilities, then it could impact natural gas exports. Of course, if it were to make landfall in exactly the wrong place, then it could affect natural gas infrastructure. There are a lot of if’s there but keep these storms in mind. [WFG FM]