NYMEX May natural gas futures was steady in US morning trading Tuesday as the market appeared to be balanced from a mixed weather outlook, falling demand and a drop in production.
As of 10:37 am EDT (1437 GMT), the May contract was trading at $2.751/MMBtu, down 0.1 cent from Monday's close. So far on Tuesday, the May contract has traded in a range of $2.711-$2.761/MMBtu.
Phil Flynn, senior market analyst at Price Futures Group, said "with one of the coldest Aprils on record" it appears that the market may skip the shoulder months this year and go directly from the "winter to the summer season."
The glut of natural gas expected from the record production numbers in April has simply not happened as "cold weather has driven demand into late April," Flynn continued.
The most recent six- to 10-day weather outlook from the National Weather Service is mixed, as it calls for the likelihood of warmer-than-average temperatures in the Southwest, Northwest and Rockies, while colder-than-average temperatures are expected in the Northeast, Southeast, Midwest, Midcon and Texas.
US demand fell to an estimated 73.8 Bcf/d on Tuesday, down from the 78.4 Bcf/d levels seen on Monday and the 77.3 Bcf/d averaged over April to date, according to S&P Global Platts Analytics.
This fall in demand seen on Tuesday is expected to continue, as over the next seven days US demand is estimated to average 70.1 Bcf/d before falling to an estimated 64 Bcf/d average over the next eight- to 14-day period, Platts Analytics demand data shows.
Dry production took a tumble from the historic levels seen in the April month on Monday and Tuesday, as US dry production dropped to an average of 77.2 Bcf/d over those days, down from the 78.2 Bcf/d averaged so far over April and the 78 Bcf/d averaged over the weekend.
However, production is expected to tick back up slightly in the coming days, as dry production is estimated to average 77.6 Bcf/d over the next seven days, still below the April average but well above the 71.3 Bcf/d averaged over April 2017, Platts Analytics supply data shows.
Looking ahead, it will be important to keep an eye on the storage numbers and when injections begin, as Flynn joked: "storage season was cancelled this year."
