Wedoany.com Report-Nov 16,   In an exclusive interview with Rigzone on Friday, David Seduski, the head of North American gas at Energy Aspects, said Henry Hub prices “have been falling yesterday and today for a few reasons”.

“One is that the two-week forecast began the week expecting a shot of colder than normal in late November. That has disappeared over the last two days’ weather runs to weaken models for heating demand,” Seduski told Rigzone.

“It’s going to be a very mild November based on the current forecast. This has led to the risk that inventories will breach the 4.0 trillion cubic foot threshold sometime in the middle of this week,” he added.

“We have also seen Lower 48 gas production rising over the past few days,” Seduski highlighted.

The Energy Aspects head told Rigzone that “offshore Gulf production was hampered by Hurricane Rafael” but added that “the effects … have since passed to add 0.5 billion cubic feet per day of output”. He added that “Permian flows have also bounced off of early week lows as maintenance on the Permian Highway Pipeline moderates”.

“It’s both falling demand and rising supply squeezing Henry Hub support over the past two days,” Seduski concluded.

In a separate exclusive interview today, Ole R. Hvalbye, a commodities analyst at Skandinaviska Enskilda Banken AB (SEB), said the U.S. natural gas market has seen a sharp decline this week, “with the Henry Hub benchmark falling 11 percent since the Wednesday close”.

“This pullback can be attributed to recovering production levels and a larger than expected storage injection, as highlighted in the latest report from the Energy Information Administration (EIA),” he added.

Hvalbye told Rigzone that the EIA’s weekly data for the week ending November 8 “showed a robust injection of 42 billion cubic feet”, which he noted was “well above the typical seasonal increase of 28 billion cubic feet”.

“As a result, total U.S. gas inventories have climbed to 3,974 billion cubic feet, which is 228 billion cubic feet above the five-year average of 3,746 billion cubic feet and 158 billion cubic feet higher than the levels recorded at this time last year,” he said.

“This substantial build suggests that the market is well-supplied per now and heading into the winter season,” Hvalbye added.

The SEB analyst noted that domestic natural gas production “has rebounded significantly, reaching 102.4 billion cubic feet per day today, up from an average of 99.95 billion cubic feet per day during the previous week”.

“However, demand in the Lower 48 states remains weak, with daily consumption falling to 78.4 billion cubic feet, below the five-year seasonal average (according to Bloomberg),” he added, stating that this decline in demand aligns with seasonal cooling trends.

“Also, forecasts from the National Oceanic and Atmospheric Administration (NOAA) indicate that the coldest temperature differences will be centered in the central U.S., while the East and West coasts are expected to experience milder conditions over the next 6-10 days - thus supporting a lower price regime for the spot and in the short term,” Hvalbye went on to state.

Phil Flynn, a senior market analyst at the PRICE Futures Group, told Rigzone that natural gas optimism was thwarted by yesterday’s EIA injection report.

“The injection of 42 [billion cubic feet] was higher than market estimates and that gave the market the perception that production is still too high,” he said.

“Now the market needs a demand driver. Weather most likely,” he added.

Art Hogan, chief market strategist at B. Riley Wealth, told Rigzone that “this was a week where we saw the entire energy complex come under pressure, including natural gas”.

“Oil prices edged down early on this morning as oversupply concerns and demand worries stemming from a stronger dollar outweighed a steep draw in U.S. fuel stocks,” he highlighted.

“For the week, Brent is set to fall about 2.2 percent while WTI is set to decline 2.7 percent. The more volatile natural gas is down 7.3 percent since Monday,” he added.

“U.S. crude inventories last week rose by 2.1 million barrels, the EIA said on Thursday, much more than analysts’ expectations for a 750,000-barrel rise. The energy related commodities are all trading in the same direction, and this week that is lower,” he continued.