Weekly natural gas prices lose their sparkle amid mild temperatures in key regions
In an abbreviated trading period ahead of the Memorial Day long weekend, weekly spot prices fell amid mild temperatures throughout the middle part of the country and in the northeast.
With the light of heating and cooling demand nationwide, NGI’s Weekly Spot Gas National Avg. for the period May 24-27 fell 6.0 cents to $ 2.685. The gas traded during the period was intended for delivery May 25-31 – changed by one day due to the Monday holiday.
The July Nymex natural gas futures contract, meanwhile, came in at $ 2.986 / MMBtu to close the trading week on Friday, up 2.8 cents day / day, partially offsetting a large loss. the day before. It took over as the quick month of Thursday.
Mild conditions permeated the Midwest and Northeast during the weekly spot price period, keeping prices in check and pushing the national average down.
At the end of the trading period ANR ML7 was down 8.0 cents to $ 2,800 and REX in PEPL – Putnam was down 10.0 cents to $ 2.725 which led to the downside in the region of the Midwest.
In the Northeast, the Algonquin Citygate fell 28.5 cents to $ 2.285, while the Zone 2 Iroquois fell 21.0 cents to $ 2.640.
[NGI’s natural gas price indexes have included trade data from both price reporters and the Intercontinental Exchange (ICE) since 2008. Find out more about our price index data here.]
The outlook for Friday called for comfortable temperatures in key regions to begin the first week of June, with highs in the ’60s and’ 70s in the Midwest and Northeast. But forecasters were forecasting stronger national cooling demand by the end of the week and extending into the second week of the month.
Maxar’s weather office said at the end of the first week of June that “most areas are warming” and a constant summer cooling demand is expected in tandem. “Above and well above normal temperatures are along the west coast and in the northern Rockies, while higher temperatures are returning to the Midwest and east,” said Maxar.
Natural gas futures have been on a roller coaster ride during the week.
The month before posted consecutive gains on Tuesday and Wednesday as June’s Nymex contract traded at the expiration on Wednesday’s close. It gained nearly 10 cents in its last two days as a quick month, thanks to forecasts of a greater increase in demand for heat and cooling nationwide by the second week of June.
On Thursday, however, as July took over as the start month, futures plunged, pushing down 6.9 cents day / day by a bearish government inventory report that raised further concerns. concerning supply / demand balances.
The U.S. Energy Information Administration (EIA) reported an injection of 115 Bcf of natural gas into inventory for the week ending May 21. The result exceeded the high end of analyst estimates in major polls and easily eclipsed median projections.
Temperatures during the week of the storage report were cooler than normal in the southern United States, but cooling demand has settled in the west and analysts were forecasting lighter construction than that. that the EIA had published. Prior to the report, a Bloomberg poll showed a median estimate of 106 Bcf, while a Reuters survey landed a median build of 106 Bcf. A the Wall Street newspaper the survey revealed an average construction expectation of 101 Bcf. The NGI model provided for an injection of 107 Bcf.
The estimates are compared to a 105 Bcf increase in storage a year earlier and a five-year average injection of 91 Bcf. Construction for the week of May 21 brought inventories to 2,215 Bcf.
Liquefied natural gas (LNG) export levels during the week of the EIA report fell from recent highs above 11 Bcf amid spring maintenance work on LNG facilities. LNG feed gas volumes also hovered around 10 Bcf for much of the last week of May, at least temporarily lessening the impact of a major catalyst on natural gas prices for most of the period. spring.
All noted, on Friday analysts and traders turned their attention to the looming summer cooling season and the likelihood of LNG volumes climbing, as demand in Europe and Asia holds. With supplies running out, prices on both continents are high relative to the United States, boosting demand for U.S. exports.
“… Although history tells me that I am missing $ 3.00 on natural gas this time of year, I am concerned that the rally in commodities and gas prices in the US versus Europe and Asia are too cheap, ”said Scott Shelton of ICAP Technical Analysis. “Short-term information is less optimistic than it used to be, but I have a feeling that being short is like standing in front of the freight bus that is currently driving” towards higher prices .
LNG volumes rose above 11 Bcf on Friday – a first for the week.
Spot prices ended an otherwise difficult week on Friday on a positive note. NGI’s Spot Gas National Avg. climbed 6.5 cents to $ 2.705. The Friday negotiation concerned gas delivered on Tuesday, June 1.
NatGasWeather said Friday that Memorial Day weekend conditions did not appear generally favorable for demand, given comfortable seasonal temperatures and sporadic thunderstorms in the Midwest, Great Lakes and the Northeast, with peaks in the 60s and 70s.
Nevertheless, demand is expected to resume in early June. As Friday’s trading was for gas delivered to start the new month, the outlook has helped physical markets rebound.
Friday’s momentum was led by jumps out west, where the heat had already arrived and demand for cooling had kicked in. El Paso S. Mainline / N. Baja earned 32 cents per day averaging $ 3,060 and SoCal Border Avg. rose 18.0 cents to $ 3.015.
A combination of weather-related demand and maintenance interruptions fueled price spikes at SoCal Citygate. Prices at the hub soared from $ 1,225 to $ 4.715, leading all of the day’s winners. The hub was impacted by the work planned at Southern California Gas Co. of Sempra Energy.
Prices also climbed in the mid-section of the country, with Chicago Citygate up 8.5 cents to $ 2,800 and Oneok WesTex up 12.5 cents to $ 2.650.
In the Rocky Mountains, Questar gained 15.5 cents to $ 2,800, and in the volatile northeast, the Iroquois’ Zone 2 climbed 53.5 cents to $ 2.735.
Strong regional cooling demand is expected in parts of the West and South early in the coming week. By June 7, temperatures are forecast to warm up in most of the United States in the 80s and 90s, with 100 in the southwestern desert. NatGasWeather said the change could result in consistent use of air conditioners in most Lower 48s.