Natural gas futures were choppy on Tuesday. Prices rose sharply early on the growing potential for lingering cold weather in early March, but then pulled back significantly as part of a broader commodity selloff amid easing political tensions. The last half hour of trading saw a further rise after the latest weather data, with March Nymex gas futures climbing 11.1 cents to a settlement of $4.306/MMBtu. April ticked 8.1 cents to $4.241.

In short :

• The cold persists until the beginning of March
• The image of the offer is not yet clear
• Cash closes again despite a slight break

Spot gas prices were mostly higher despite a slight pause ahead of another winter storm targeting the Lower 48 this weekend. However, a huge slide in the northeast sent NGI’s Spot Gas National Avg. falling from $1.595 to $4.075.

Although it looked like the upcoming winter blast could be the last arc of the season just last week, models have reversed course in recent races, erasing all the widespread heat that had been predicted. for the end of the month. Bespoke Weather Services said the US and European models made another move in the colder direction overnight given some changes in weather patterns.

“Given all the recent volatility in the pattern, confidence is back to lows,” Bespoke said. “Tropical forcing signals do not correlate with colder changes, in our view, but the correlation is certainly not 1:1, so we remain cautious.”

NatGasWeather noted that the midday Global Forecast System (GFS) was still warmer than the European model, but it was trending closer in showing sub-freezing temperatures moving more aggressively across the northern United States from February 26 to March 2. All told, the GFS added nearly 25 degrees of heating in 24 hours.

“Obviously this is an uptrend,” NatGasWeather said.

Supply image in support of prices

The company noted that the lingering cold would ensure that current supply shortfalls would be close to 250 billion cubic feet by early March. Additionally, it is possible that supply shortages will increase further if enough cold air can enter the Lower 48 in early March.

Mobius Risk Group noted that there were several bullish storage data points from various pipelines to start the week. Although population-weighted degree days fell by 20 weeks/week, collective withdrawals from the Transcontinental, Southern Star, Columbia Gas and Eastern Gas pipeline systems fell a modest 6 billion cubic feet. Additionally, a sample of daily installations was down about 13 billion cubic feet.

“Overall, the weekly releases and daily releases support a Thursday inventory report close to market expectations of 200 billion cubic feet,” Mobius said.

An important note, the company said, was the sharp increase in salt withdrawals. A sample of salt storage facilities showed an additional withdrawal of 12,100 cu ft per week/week.

“In summary, storage data continues to favor market bulls,” Mobius said. “There are still several days left in the current week, but the weather-adjusted storage data continues to represent a tight balance between supply and demand year-over-year.”

Analysts at Tudor, Pickering, Holt & Co. (TPH) said there was continued uncertainty about where supply might finally settle ahead of the shoulder season. They gave equal chances for reduced volumes to remain a factor in the current situation and lower supply due to activity at the end of the year, with high levels “just that and in the rear view mirror “.

[Want today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check out NGI’s daily natural gas price snapshot now.]

The TPH team noted that Monday’s production level of approximately 95,100 cfd is approaching the 96,100 cfd it had anticipated in the first quarter of 2022 the year – following recent strength in residential/commercial demand and continued strong power generation demand while supplies have remained constrained, it is difficult to see too much of a downside in the 2022 forward curve.”

TPH analysts modeled storage at the March exit with 1.4 Tcf remaining in storage and refills throughout the summer, bringing stocks back to the five-year average by the end of October. “That said, as the Haynesville rigs on the dry gas side and private activity in the major associated basins continue to outpace our modeling, we see a potential line of sight for surprise supply on the upside.”

Northeast Volatility Abounds

Spot prices continued to strengthen on Tuesday in the lingering cold of last weekend’s winter blast.

Temperatures in the Midwest and Northeast remained cold, with overnight lows in the 30s deep in the South and Southeast, keeping demand high. Warmer weather is on the way, however, with temperatures on Wednesday and Thursday expected to reach more comfortable levels in the 50s to 70s.

The precipitous decline in heating demand sent spot gas prices in the Northeast tumbling from highs the previous day. Tenn Zone 6 200L gas the following day fell $17.025 daily to an average of $4.875, while non-NY Transco Zone 6 fell $2.005 to $3.770.

The heavy losses extended upstream into Appalachia and the Southeast, where Eastern Gas South fell 14.5 cents to $3,580 and Cove Point fell $1,905 to $4,275, respectively.

The rest of the country, however, posted moderate gains. Henry Hub climbed 21.5 cents to $4,265, while Houston Ship Channel gained 15.0 cents to average $3,900.

Similar price increases were seen in the midsection of the country, while prices in California rose 35.5 cents.