Weekly natural gas spot prices crept higher in the week as regional hub values varied amid changes in weather forecasts that pulled back the number of cooling-degree days expected as the calendar drifts from summer closer to fall.
NGI’s Weekly Spot Gas National Avg. for the Aug. 12-16 period gained 6.0 cents to $1.645/MMBtu.
Gains were substantial at Appalachia hubs, where warm weather continued to drive demand. Texas Eastern M-2, 30 Receipt prices were 21.0 cents higher week/week to $1.505. Northeast prices were also supported by hot weather. Algonquin Citygate was up 20.5 cents to $1.685.
Conversely, losses were weighty in California, as a cooldown was expected to bring some relief to the region. SoCal Border Avg. posted the largest losses on the week, fading 44.5 cents to an average of $1.765. SoCal Citygate prices followed, sinking 43.0 cents week/week to $1.925.
Meanwhile, September Nymex natural gas futures closed what had the potential to be a winning week for the bulls at $2.123, off 7.4 cents day/day and 2.0 cents lower on the week.
The prompt month contract climbed 3.0 cents in the first three days of the week, finishing Wednesday (Aug. 14) at $2.219, as producers appeared to be tightening belts anew amid a stubbornly high natural gas inventory.
Wood Mackenzie estimated production at 100.7 Bcf/d on Friday, down from a prior seven-day average of 101.2 Bcf/d. Notably, Thursday’s output estimate was only revised up 0.6 Bcf to 101.0 Bcf/d, the lowest print so far this month.
Futures rallied into Thursday as the market responded to the U.S. Energy Information Administration’s (EIA) storage data that outlined a rare summer storage drawdown. The print showed 6 Bcf of natural gas was pulled from Lower 48 storage facilities in the week ended Aug. 9. That contrasted with an injection of 33 Bcf a year earlier and an average gain of 43 Bcf for the week over the previous five years. It brought the total supply to 3,264 Bcf, 13% higher than the five-year average.
A withdrawal is “rare” for this time of year as the market usually sees supplies build as soon as a cooldown begins in August, Phil Flynn, senior market analyst at The Price Futures Group, said. Natural gas demand has been “through the roof, and producers are showing some signs of restraint – and that’s giving the market hope for a bit of a turnaround.”
Falling On Fall
Storage-driven gains quickly reversed, however, as the market turned its gaze away from the tightening supply toward moderating weather and lower demand expected in the shoulder season.
“We are at the period where we see peak loads peak, and they are going to start to decline as we head into September and then through October,” said Blake Owen, managing partner at Pinebrook Energy Advisors.
EBW Analytics Group senior analyst Eli Rubin noted that power sector loads spiked during a scorching start to August, with many key electricity hubs pressing $100/MWh and power sector gas burns topping 50.0 Bcf/d. Adding to gas demand was shallow wind output and cheap gas spurring 5.2 Bcf/d of fuel switching.
He said, though, that weather support was eroding, and electricity loads could plunge.
The National Weather Service (NWS) long-range forecast Friday (Aug. 16) showed “hazardous heat” on tap for the southern Plains to the central Gulf Coast in the week ahead. High temperatures that could climb into the 100s in much of Texas “could set daily records,” NWS said.
North of the region, however, most areas were expected to see highs near to slightly below average. Some below-normal lows were possible for the Ohio Valley. Above-average lows were expected in the Intermountain West. The Pacific Northwest into northern California could see temperatures “a bit below normal,” NWS said.
Cash Prices
Natural gas spot prices tumbled Friday amid the weight of widespread cooling and weekend days included in the Saturday-Monday package.
West Texas hubs posted sharp losses led by Transwestern, off $1.400 day/day to negative $3.165, followed closely by a $1.315 loss at the regional benchmark Waha hub to an average of negative $2.645.
Impedance Match analyst Kevin Green said ERCOT peak load was forecast to shrink Saturday to 82,500 MW from 84,600 MW Friday. Wind and solar generation trimmed demand for natural gas-fired generation. “Solar supply remains high through the weekend but is looking lower next week,” Green said.
While the South Central region may be hotter than normal in the coming weeks, Rubin also noted that Venture Global LNG Inc.’s Plaquemines liquefied natural gas export facility “could begin to increase LNG feed gas intake at any point.” NGI’s U.S.LNG Export Flow Tracker showed 14.9 Mcf of feed gas flowing to the facility Friday.
Seasonal temperatures expected elsewhere pressured prices. SoCal Border Avg. slid 24.5 cents to $1.560, and Transwestern San Juan in the Rockies fell 19.5 cents to an average of $1.465. In Appalachia, Transco-Leidy Line slipped 19.0 cents to $1.420, while Algonquin Citygate in the Northeast sank 16.0 cents to $1.620.
