EBW Analytics Group Power Analyst Eli Rubin warned, in an EBW report despatched to Rigzone on Tuesday, that “bearish” medium-term NYMEX fuel dangers are “rising into the Spring”.
“The lengthy vacation weekend supplied a internet climate demand loss, at the same time as a short chilly shot emerges early subsequent week,” Rubin stated within the report.
“Technicals level decrease, and indicators are rising that subsequent week might characteristic the final triple-digit EIA [Energy Information Administration] storage draw of the winter earlier than warming in early March,” he added.
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Rubin famous within the report that pure fuel manufacturing is rising steeply, “reaching yr up to now highs Monday and setting the stage for a weakening spring outlook”.
“Immediate provide power is most outstanding within the Marcellus and Permian, however provide tailwinds are additionally gathering for late 2026 alongside a serious Haynesville rig depend improve,” he stated.
The EBW Power Analyst stated bearish warning surrounding one other chilly shot into early subsequent week might postpone a sell-off. He warned, nonetheless, that “the yr over yr storage comparability might flip from a 97 billion cubic foot deficit to a 165 billion cubic foot surplus into early March, possibilities for a late-winter run larger are fading, and dangers for one more delicate spring threaten sub-$3.00 per million British thermal unit (MMBtu) fuel costs within the early injection season”.
Phil Flynn, a senior market analyst on the PRICE Futures Group, advised Rigzone in an unique interview on Monday that the U.S. pure fuel value was down “due to Spring fever”.
“The snowpacks throughout the nation have melted, particularly within the Midwest the place above regular temperatures are placing … downward stress on pure fuel,” he added.
“Even with a return of winter later subsequent week, is it going to be chilly sufficient to make a big adjustment in pure fuel provides?” he continued.
“We’re getting nearer and nearer to actual Spring – not this little style of spring that we’re getting this week,” he went on to state.
Spot Value Close to $8 per MMBtu
In its newest brief time period vitality outlook (STEO), which was launched earlier this month, the U.S. Power Info Administration (EIA) highlighted that, in January, the Henry Hub spot value for pure fuel averaged $7.72 per MMBtu.
The EIA outlined within the STEO that the value rose “sharply from December’s common of $4.26 per MMBtu” and marked “the very best nominal month-to-month common since September 2022”. The EIA additionally famous within the STEO that, each day, pricing on the hub set a nominal report of $30.72 per MMBtu on January 23.
“These value will increase mirrored stronger pure fuel demand pushed by widespread colder than regular climate throughout a lot of the USA, notably within the latter half of the month,” the EIA stated in its February STEO.
“Winter Storm Fern intensified heating demand whereas pure fuel manufacturing declined due to non permanent effectively freeze-offs. For the week ending January 30, the mixture of robust demand and a drop in manufacturing led to a withdrawal of 360 billion cubic ft of pure fuel from stock, the most important storage withdrawal on report,” it added.
“Though market tightness in January was acute, futures costs point out the market perceived the tightness as comparatively short-lived. The February futures value settled considerably larger than the March value on January 28,” the EIA continued.
“The February pure fuel futures contract for supply at Henry Hub settled at $7.46 per MMBtu on January 28, whereas the March contract closed at $3.73 per MMBtu, the most important distinction between the entrance and following-month costs since a minimum of 2014,” it went on to state.
The EIA additionally highlighted in its STEO that, on February 2, “the brand new March 2026 prompt-month contract posted its largest one-day decline in 30 years, in line with Bloomberg L.P, falling 25.7 p.c to $3.24 per MMBtu as some climate forecasts indicated comparatively delicate climate for a lot of the nation in mid-February”.
To contact the writer, electronic mail andreas.exarheas@rigzone.com
