According to pipeline data estimates, natural gas production has recovered in late April to above 65 Bcf/d and Barclays in its recent market report, expects production to average around this level before dipping into declines in the second half of the year.For next Tuesday’s EIA-914 production report, Barclays expects a moderate m/m growth for February’s natural gas lower-48 production. Furthermore, production should continue to recover in March and April, as well freeze offs slowly come back online.
Natural gas prices came off at the front end of the curve, with the prompt contract down 5% w/w, as the weather forecast for the next 15 days turned milder.
Lower-than-normal HDDs and CDDs are expected in the North and the South, respectively. Back-end calendar spreads continued to be impacted by trade flows, with producer hedging activities pressuring calendar 2015 and rendering the calendar 2014 and calendar 2015 spreads completely flat on Thursday.
“We expect the spread to widen as the curve realigns with market fundamentals in the longer term; however, we do not rule out further pressure from trade flows,” Barclays noted.
Furthermore, the market should watch for the DOE’s decision regarding whether to approve more LNG export projects to non-FTA countries, which is expected to be made some time in the next few months.
The market edged higher on Thursday morning after receiving the injection for the week ending on April 19 (30 Bcf) which was 3 Bcf lower than consensus. This injection is about 13 Bcf lower than at the same time last year, partially as a result of higher weather-driven heating demand.
Both hydro generation indicators and nuclear generation for the week in reference were lower y/y, contributing to higher gas power burn outside of the effects of weather and coal displacement.
Source: Barclays