Baseload natural gas prices declined on the first day of September bidweek trading on Monday, led lower by prices in West Texas sinking below zero.
NGI’s Bidweek Alert (BWA) showed prices weakening across most regions in anticipation of lower demand for gas during the milder autumn season. Forecasts for the 16- to 25-day period favored “very nice temperatures” over the northern half of the country keeping national demand at a moderate level, NatGasWeather said.
Fixed price trades for Waha in West Texas sank below zero for the first time since May as the startup of a major pipeline was not expected to be in time to relieve a supply glut. The Permian Basin benchmark traded as low as negative $1.450 and as high as 90.0 cents, averaging at negative $1.030/MMBtu on day 1 of September Bidweek trading. The hub averaged at 22.5 cents for August bidweek.
The long-awaited 2.5 Bcf/d Matterhorn Express Pipeline was expected to enter service in September, producer Devon Energy Corp. said earlier this month. The project originally was slated to come on in the summer but was delayed by Hurricane Beryl in July.
Waha prices could stay suppressed until the Matterhorn pipeline relieves the region’s bottlenecks, according to RBN Energy LLC analyst Taylor Noland.
In California, SoCal Citygate averaged $1.825, down from $3.190 during the previous month. The decline came despite expectations for above-average heat in Southern California and the Southwest in September.
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Abundant natural gas storage levels and producers’ responses to the overhang have had huge sway over price movements this year after a second consecutive mild winter swelled inventories. In response, industry curtailed output early this year and again tapped the brakes in August with shut-ins and pipeline maintenance in response to price slumps.
Most recently, the output restraint led to a rare midsummer withdrawal from storage in early August. However, that trend was short lived as it was followed by a larger-than-expected build to keep bears in control.
In basis trade on Monday, Chicago Citygate saw September basis deals between minus 41.0 cents and minus 40.0 cents for an average of minus 40.3 cents, BWA data show. That’s down from an average of minus 35.75 cents for August.
In Appalachia, one of its key indicator prices held negative relative to the Henry Hub price. Deals for Texas Eastern M-2, 30 Receipt – which includes southwest Pennsylvania, West Virginia and Ohio – averaged at minus 71.0 cents for September. That compared with an average of minus 75.5 cents for August.
Related markets offered mixed support to bidweek trading on Monday. The September Nymex futures contract, set to expire Wednesday, slid 6.6 cents to settle at $1.956. Meanwhile, next-day cash prices for Henry Hub added 10.5 cents to average at $1.930 ahead of a bout of late-summer heat.
