Natural Gas - Bearish Weather Outlook In November Presents Biggest Headwind Near-Term
The natural gas market has a lot of things going well so far with the exception of the early November weather forecast.Now aside from the bearish weather that's coming, the physical market has really tightened up in the last few days with Henry Hub cash now trading over $2.8/MMBtu.LNG exports, which was delayed last week, are finally now getting close to ~9 Bcf/d with this psychological figure hitting by this weekend.On the production front, all of the shut-in gas production is now back online with the average coming in around ~88 Bcf/d. But as you can see from the recent production trend, the initial jump from wells that were shut-in will subside, and we expect Lower 48 production to trend back loser by November. We still maintain our view that Lower 48 production should be closer to ~86 Bcf/d.So to sum up the current market dynamic: 1) Cash market firmed up with LNG exports returning and physical market balance improving. 2)Weather outlook is bearish for early November, which will limit the upside in natural gas futures. 3) Production is set to keep declining into year-end setting us up for a very bullish 2021.
Seekingalpha · 10/23 07:01