In a huge reversal from last month, natural gas prices for July baseload are trending sharply lower amid weaker liquefied natural gas (LNG) demand stemming from an explosion at the Freeport export terminal. Forecasts for less extreme heat than what has been seen so far this month also were weighing on July prices, according to NGI’s Bidweek Alert (BWA).
Gas prices across the country were sporting $5 and $6 handles for the majority of locations that traded on Day 1 of the July bidweek period, which began on Friday (June 24). This compares with $8 gas prices seen a month ago.
Notably, many of the supportive factors influencing prices for June baseload remain in place. Chief among them are the precariously low storage levels plaguing key regions of the United States.
The U.S. Energy Information Administration’s latest inventory report showed working gas in storage stood at 2,169 Bcf as of June 17, which is 331 Bcf below the five-year average. Roughly a month ago, stocks were 310 Bcf below the five-year average.
Despite the expansion in the deficit month/month, the latest storage data indicated that the subsequent outage at Freeport – expected to last at least three months – was poised to dramatically improve balances. Ahead of the EIA report, analysts had expected an injection in the 60s Bcf. Instead, the agency said inventories rose by a much higher 74 Bcf.
On the morning of June 8, Freeport experienced an explosion in pipe racks that support the transfer of LNG from the facility’s LNG storage tank area to the dock facilities. None of the liquefaction trains, LNG storage tanks, marine facilities or LNG process areas were impacted, according to Freeport officials. An investigation continues.
The prolonged outage means that the 2 Bcf/d of gas once destined for the Freeport facility could be injected into storage. This has quelled concerns of a supply crunch during the upcoming winter, especially in light of the recent storage data.
Prices have responded accordingly. Benchmark Henry Hub did not trade on Day 1 of the July bidweek period, BWA Day 1 data showed. However, the July Nymex futures contract settled Friday at $6.220. On Day 1 of June bidweek trading, the June Nymex contract settled at $8.796.
Nevertheless, production also has lagged growth estimates. Output is nearing late 2021 highs, but it remains short of the 97 Bcf/d that is needed to combat strong demand. Tudor, Pickering, Holt & Co. (TPH) said its data shows the Permian Basin averaging around 13.5 Bcf/d in recent days, off from about 14 Bcf/d in May. Haynesville Shale output also is averaging around 13.5 Bcf/d recently, which is in line with the May average but below TPH’s modeled output level.
Against that backdrop, Waha July baseload gas traded around $5.600, off from an average $8.090 for June baseload, according to BWA Day 1 data.
Meanwhile, power burns also remain strong, with record heat seen across large swaths of the country in recent days. Although forecasts show moderating weather in the coming days, the general expectation for the summer is above-average heat. Notably, power burns have routinely surprised to the upside even when prices were above $8.000.
Panhandle was averaging at $5.730 for July baseload, off $2.580 from the June bidweek average, BWA Day 1 data showed. In the Rockies, Opal averaged around $6.100 on Day 1 of the July bidweek trading period, down $2.710.
"gas" - Google News
June 27, 2022 at 11:25PM
https://ift.tt/7sP8rxa
July Baseload Natural Gas Trending Dramatically Lower on Freeport Outage, Improving Balances - Natural Gas Intelligence
"gas" - Google News
https://ift.tt/woYu2Ov
https://ift.tt/X52L0Dn
Bagikan Berita Ini
0 Response to "July Baseload Natural Gas Trending Dramatically Lower on Freeport Outage, Improving Balances - Natural Gas Intelligence"
Post a Comment