Supply Deficits to Stall Near -300 Bcf Next 7-Days But w/Potential to Improve May 10-20
May 2, 2022: It should be another volatile week in the nat gas markets and where daily moves of 30-40+¢ should be expected. The weekend weather data was mixed with the GFS losing a little more demand than the EC gained. Although, what could be most important is where US production comes in and whether it’s able to overcome 95 Bcf/day, which it failed to do last week on a surprising drop to 93 Bcf for a few days. We continue to believe if US production doesn’t increase by as much as the nat gas markets are hoping/expecting soon, a quick return to $8 on June’22 contracts should be expected. Of course, geopolitical news is likely to also influence trade, especially after Russia cut off flows to two European countries last week, resulting in a spike in European prices.
It’s a rather messy weather pattern the next 7-days with numerous weather systems tracking across the country w/heavy showers and thunderstorms, just slightly cooler than normal across the northern US as lows drop into the upper 20s to lower 40s, while very warm over the southern US w/highs of 70s to 90s, hottest Southwest deserts and at times into Texas and Florida. Also of importance, the weekend weather data maintained a relatively bearish pattern May 10-15 as the northern US finally warms into the very nice upper 60s and 70s for light demand. The southern US will also warm a few degrees as coverage of highs reaching the mid-80s to lower 90s increases. Essentially, as demand eases across the northern US May 10-15, the southern US will pick up some of the slack, but not all. Overall, we view weather patterns as neutral to slightly bullish the front 7-days, then slightly bearish for days 8-15 as TDDs drop below normal. The net result will be to stall deficits near -305 Bcf though May 10th, then improving slightly May 10-17.