After popping in mid-June, weekly cash prices essentially held even at strong levels amid persistent summer heat and solid demand across large swaths of the country.
NGI’s Weekly Spot Natural Gas National Avg. for the June 21-25 trading period inched 1.0 cent lower to $3.160. However, that followed a jump of 24.0 cents a week earlier.
Air conditioners were cranking across the country, with highs in the upper 80s over much of the Midwest, 90s in Texas and the South, and 100s in the Southwest deserts.
At the end of the trading week, prices were mixed in several regions but up across most of the South. Henry Hub advanced 6.0 cents to $3.280, while Pine Prairie tacked on 7.0 cents to $3.250 and Florida Gas Zone 3 picked up 8.5 cents to $3.355.
The July Nymex contract, meanwhile, finished the week on a high note, settling up 7.8 cents day/day at $3.496/MMBtu. It marked a fourth straight day of gains.
Expectations for continued lofty temperatures helped to fuel both futures and cash prices late in the week. NGI’s Spot Gas National Avg. gained 22.5 cents to $3.375 on Friday.
Record-breaking temperatures were anticipated in Oregon and Washington over the weekend, with Portland and Seattle forecasted to endure triple-digit highs. Parts of the Pacific Northwest were expected to see temperatures up to 40 degrees above normal and challenge all-time daily highs, according to AccuWeather.
The heat was forecast to peak from Saturday through Monday as high pressure settled in, pushing temperatures upward, the forecaster said.
The record high in Washington was 118 degrees heading into the weekend, AccuWeather said. Oregon’s all-time high was 117.
Weekend temperatures were also expected to climb across the East Coast, with high in the upper 80s and 90s.
“The overall picture remains bullish,” EBW Analytics Group said, “with the potential for the August natural gas contract to set a new contract high.”
August takes over as the prompt month on Tuesday. It rose 8.3 cents to $3.520 on Friday.
Futures Fly
Natural gas futures rallied throughout the week, lifted by the favorable weather forecasts as well as signs of renewed export vigor and demand confirmation in the form of a light storage injection.
After hovering below 10 Bcf for much of the first half of June amid seasonal maintenance work at several export facilities, liquefied natural gas (LNG) levels rebounded during the latest week. LNG feed gas volumes topped 10 Bcf most of the week and held close to 11 Bcf on Thursday and Friday – near the record highs reached in the spring.
Demand for U.S. LNG is running high from destinations across Asia and Europe, where supplies of natural gas are low following a harsh winter and chilly spring.
“LNG feed gas flows will increase significantly” as maintenance work culminates, the EBW team said, “strengthening cash prices and providing support” for futures.
Meanwhile, the U.S. Energy Information Administration (EIA) on Thursday reported a 55 Bcf injection into storage, falling well below expectations and confirming the strong summer demand story.
The result came in 60 Bcf below the year earlier build and 28 Bcf below the five-year average. It also fell below the lowest estimate in major surveys ahead of the report.
Total working gas in storage as of June 18 stood at 2,482 Bcf — 513 Bcf below the same week in 2020 and 154 Bcf below the five-year average, according to EIA.
“With a hotter than normal summer expected over much of the U.S. for July and August, deficits should steadily increase towards 200 Bcf to 250 Bcf” – compared to the five-year average – “by the start of September,” NatGasWeather said.
With higher prices comes the likelihood of greater production in time, the firm said, while also leading to softer demand on fuel switching to cheaper alternatives such as coal. “But until this shows up in the EIA builds, natural gas bulls are strongly in control.”
Friday Cash
Persistent cooling demand propelled spot gas prices on Friday for weekend through Monday delivery.
Heat permeated most of the Lower 48 during the final trading session of the week. NatGasWeather said hot high pressure held steady across the West and into Texas, with highs ranging from the 90s in the South to above 100 in parts of Arizona, Nevada and California.
Atmos Zone 3 in Texas jumped 23.5 cents day/day to average $3.315, while in the Southwest, El Paso S. Mainline/N. Baja soared 87.0 cents to $4.835.
The anticipated record-breaking heat this weekend in the Northwest and into the Mountain West added to the upward price momentum.
Malin rose 13.0 cents to $3.585 and Northwest Sumas climbed 8.0 cents to $3.430.
While temperatures in the Northeast were pleasant Friday, more intense heat was expected to move in over the weekend. With highs near 90 expected in Boston, Algonquin Citygate spiked $1.250 to $3.875.
Prices also rose across the Southeast, with Cove Point up 21.0 cents to $3.180.
National demand was forecast to temporarily ease to begin July. However, it was expected to increase again July 4-10, “as upper high pressure strengthens over the southern and eastern U.S., while becoming warm to very warm over the northern tier,” NatGasWeather said. “What also makes the coming pattern bullish is there remains solid potential for above normal temperatures to continue over much of the U.S. through the second week of July.”
Well into the first half of July, the forecaster said, the western, southern, and eastern portions of the United States will be very warm to hot with highs of mid-80s to 100s for strong demand.
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June 26, 2021 at 05:37AM
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Weekly Natural Gas Prices Hold Steady as Sizzling Summer Heat Spreads - Natural Gas Intelligence
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