Henry Hub entrance month futures have reverted to a downtrend that started in early October, following a short lived peak at $2.55 per million British thermal models (MMBtu) yesterday night, amidst expectations of hotter climate for the ultimate week of October.
That’s what Ole R. Hvalbye, a Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), instructed Rigzone in an unique interview on Wednesday.
“The present pure fuel demand within the Decrease 48 states has reached its highest stage since early September, recording 76.0 billion cubic ft per day right now, a rise from the weekly common of 69.3 billion cubic ft per day (Bloomberg knowledge),” Hvalbye mentioned.
- Advertisement -
“But, forecasts recommend an increase in temperatures throughout these states, returning to above-normal ranges by the weekend. Therefore, decreasing demand, thus pushing costs down,” he added.
Within the interview, Hvalbye said that right now’s estimated feed fuel provide to U.S. LNG export terminals stands at 13.2 billion cubic ft per day, “with a famous lower on the Sabine Go terminal”.
“U.S. home pure fuel manufacturing has barely declined to 101.4 billion cubic ft per day from a current excessive of 102.3 billion cubic ft per day on October 12 and a weekly common of 101.8 billion cubic ft per day,” he added.
“The pricing for U.S. pure fuel futures has seen a lower, with November contracts down 2.7 p.c at $2.42 per MMBtu, and December contracts down 1.7 p.c at $2.89 per MMBtu,” he continued.
In one other unique interview right now, Phil Flynn, a Senior Market Analyst on the PRICE Futures Group, instructed Rigzone that pure fuel is “pulling again because it appears to be like just like the chilly blast would possibly ease a bit”.
“Shoulder season for demand is in full gear and there are nonetheless some lingering energy outages in Florida and North Carolina that … [are] decreasing demand,” he added.
“Merchants are additionally attempting to entry the potential for one other chilly entrance which will hit the U.S. to begin November,” he continued.
“Whereas it’s too early to inform, some noticed that there’s a probability that early November may see a record-breaking chill,” Flynn warned.
In a separate unique interview, Frederick J. Lawrence, the ex-Unbiased Petroleum Affiliation of America (IPAA) Chief Economist, instructed Rigzone {that a} mixture of fundamentals, climate, and different elements are impacting pure fuel costs this week.
“Regardless of the return of colder temperatures to numerous areas such because the Midwest and Northeast, many areas (such because the Southwest) have just lately skilled hotter seasonal climate,” he highlighted.
“This might change quickly because the central and jap areas are forecast to obtain a chilly, Canadian air entrance throughout midweek,” he added.
“Pure fuel continues to guide as the biggest supply of energy era for the U.S. In its day by day era combine, the EIA experiences that pure fuel supplies 42 p.c of energy era as of 10/16, or 4,342,021 mwh, which was the biggest producing supply by far with nuclear following at 18 p.c after which coal at 15 p.c,” he continued.
Lawrence famous within the interview that inventories for pure fuel have remained pretty comfy this 12 months.
“On Oct. 10, the EIA reported an 82 Bcf construct in inventories that was bigger than the market anticipated. On Oct. 4, working fuel in storage was 3,629 Bcf based mostly on EIA estimates. Shares had been 124 Bcf greater than final 12 months at the moment and 176 Bcf above the five-year common of three,453 Bcf,” he mentioned.
“Based mostly on these weaker fundamentals and wildcards impacting value, producers have continued their modest allocation of rigs directed towards pure fuel,” he added.
“Final Friday, Baker Hughes reported that the pure fuel fleet dropped one rig to hit 101 whole, which compares to 117 gas-directed rigs a 12 months in the past,” he famous.
Within the interview, Lawrence mentioned you will need to do not forget that along with its rising function in energy demand, the U.S. continues to export extra fuel globally.
“The EIA reported {that a} whole of 26 LNG vessels with 96 Bcf of pure fuel departed the U.S. between Oct. 3-9. This compares to 22 vessels carrying 73 Bcf a 12 months in the past based mostly on EIA knowledge,” he added.
To contact the creator, electronic mail andreas.exarheas@rigzone.com
