September baseload natural gas prices showed some modest gains day/day on the last day of bidweek trading Wednesday, but not enough to reverse a downward trend from August as prices reflected summer’s demand firmly in the rearview mirror.
The weakness in baseload prices came as earlier forecasts calling for “an extended summer” for much of the country into September gave way to cooler iterations.
“September is forecast as the coolest in over a decade,” EBW Analytics Group senior analyst Eli Rubin said.
While heat was expected to persist in the South and West, milder conditions were forecast for other portions of the country, NatGasWeather said. “National demand will be lighter due to considerably less coverage of highs into the 90s” in the first half of September, the firm said.
Baseload natural gas prices on Wednesday reflected the expected dropoff in cooling demand, according to NGI’s Bidweek Alert (BWA).
West Texas prices have been the major movers into September, with fixed prices falling negative for the first time since May. However, bidweek trading for West Texas dried up on Wednesday with no deals for the region. Permian Basin benchmark Waha traded on Day 1 of September Bidweek before turning quiet on Day 2.
The slump in West Texas bidweek prices followed a similar trend in cash markets for much of August as a supply glut grew ahead of the start-up of the Matterhorn Express Pipeline.
In fixed trade Wednesday, a few locations showed modest gains day/day. Dawn in the Midwest averaged at $1.510/MMBtu. That compared with an average $1.445 on Day 2 of trading and $1.475 for August bidweek.
In the Midcontinent, Northern Natural Demarc averaged at $1.500. That compared with $1.470 on Tuesday and $1.645 for August bidweek.
In California, SoCal Citygate averaged at $1.850 on Wednesday, up from $1.735 on Tuesday.
In basis trade, Transco Zone 6 non-NY traded between minus 61.8 cents and minus 57.5 cents to average at minus 60.3 cents. That’s a narrower discount than an average minus 61.3 cents on Tuesday and minus 66.3 cents on Monday.
Alongside the bidweek trading on Wednesday, September Nymex futures erased early declines to settle up 2.6 cents at $1.930. Meanwhile, next-day cash prices for Henry Hub fell 2.0 cents to $1.890 as physical trading shrugged off severe summer heat in the last week of August.
Power needs have spiked this week amid hotter weather. Lower 48 power generators were expected to use 53.3 Bcf of natural gas on Wednesday, Wood Mackenzie estimated.
PJM Interconnection LLC issued a maximum generation alert on Tuesday and a Hot Weather Alert for Wednesday as it forecast the day’s power load could exceed 152,000 MW. The highest preliminary peak load for PJM this summer was around 153,400 MW on July 16, the grid operator said.
However, echoing the glass half empty mood of the market, Rubin said that Wednesday’s peak in cooling degree day demand was roughly 6% below early week forecasts and represented “summer’s swan song” before cooling demand was expected to sink into Labor Day.
NGI’s Bidweek Survey prices that will reflect trades for all of September Bidweek will be published on Tuesday (Sept. 3).