Weekly spot natural gas prices fall as demand follows ‘warmest patterns in 50 years’

Weekly cash natural gas prices fell for a second week as milder winter weather dampened demand across much of the Lower 48.

NGI’s Weekly Spot Gas National avg. for John 22-26 fell $2,165 to $2,380/MMBtu with declines across all regions.

Northeast led the way down. Iroquois Zone 2 for the week it collapsed by $13,480 to average $2,820 Transco zone 6 outside NY dropped from $8,600 to $1,950. in the midwest, Chicago City Gate shed 92.0 cents to $2,150. KRGT Rec Pool in the Rockies, it fell 59.0 cents to $3,025.

Unlike the physical markets, the Nymex February futures contract rose on the week on the back of growth in the second half of the period. It settled at $2,712, up 14.1 cents on the day and up about 8% from last week’s close.

The February contract, due to expire at the close of trading on Monday, was volatile during the week. The contract bounced back from a technical double bottom earlier in the week, then traded lower after a near-record government inventory report on Thursday failed to impress.

On Friday, when trading collapsed before expiration, the February contract staged a late rally, likely fueled by traders holding short positions buying the contract to close the contract and hints of cooler weather in the longer-term forecast for February. hit or miss They could be.

Viewing scales

With weather models warming up by early February, the market remains doubtful that winter will return in force before the end of the season. If the Lower 48 has experienced its last big dose of Arctic air, the trajectory of natural gas reserves could be higher and raise concerns about an end-of-winter in excess of 2 Tcf.

Above that level concerns begin to mount of the lower 48 gas reserves, which are then tracked to the end of the injection season at the end of October above 4.0 Tcf. ExxonMobil delayed Golden Pass The LNG terminal from late 2024 to 2025 has heightened fears of oversupply, which have certainly been in the market since production has started before winter. Some actually expected a “supply purgatory” in 2025.

However, winter is, as always, a wildcard to prevent this. And it did the best job in the week ending January. 19, with winter storms at their peak sending demand above 160 Bcf/d and freezing around 15 Bcf/d of gas supplies.

As a result, the US Energy Information Administration (EIA) announced a 326 selection Bcf of gas from storage, the third highest on agency records since 2010. The year-over-year excess of gas in storage fell to 110 Bcf from 2010 peak 585 Bcf at the end of December.

That frigid scenario reversed itself for the next two weeks “the hottest designs of the last 50 years” for a period expected to reduce gas demand below seasonal levels. Storage surpluses could swell again above 300 Bcf.

But one change that market participants are watching closely almost obsessively for some, it’s a loss of production since the freeze began in mid-January. The effect of these freezes persists, keeping gas production about 2 Bcf/d below its record levels above 106 Bcf.

On Friday, the Lower 48 was on pace to produce 104.3 Bcf, Wood Mackenzie estimated.

EBW Analytics Group analyst Eli Rubin said the recent 1-2 Bcf/d production losses could take several weeks or longer to recover. Rubin said the market is generally unaware that a slow return to output could act as price support.

Wood Mackenzie’s Eric McGuire, an analyst, also emphasized that supplies were more vulnerable in this latest cold spell than in past major storms. This time there was more freezing than the last two major cold events, despite fewer gas-weighted days.

The January 2018 “bomb cyclone” caused about 27 Bcf of freezing, while Winter Storm Uri caused 83 Bcf of closing. By comparison, recent storms lost 53 Bcf of supplies.

“While production has increased, it has not increased as much as freezes, suggesting that the new production we have seen in recent years is more susceptible to freezes than older production,” McGuire said.

Cash prizes mixed

Physical spot prices fell in most regions on Friday. Weather systems continued to sweep across the country, bringing rain across the South and parts of the Midwest and snow to northern states.

Tea Northeast Regional Avg. jumped $1,345 day/day to average $3,840. Algonquin City Gate it sailed $2,145 higher to $4,600.

Another cluster of gains was in Appalachia. Texas Eastern M-3, vanwhose supplies include gas bound for New York, rose 28.0 cents to $2.015.

The steepest declines were in California and the Rocky Mountains. Smart shed 71.5 cents to $2,810. Cheyenne Hubwith the Rockies’ most active trade on Friday, down 16.5 cents to $2,030.

Accuweather meteorologist Alex Sosnowski said the Northeast faced snow and colder air this weekend after the thaw. The latest in a series of weather systems bringing rain and fog across the East was expected to end Monday with a flurry of cold and snow from Ohio to West Virginia and New England, Sosnowski said.

But the cooling won’t approach last week’s conditions because Arctic air will be absent, he said.

After an upward trend through the end of this week, temperatures will drop this weekend into early next week, but arctic air will be absent. New York City, after highs in the 50s on Friday, could dip into the mid-30s on Monday, cold enough for wet snow, he said.

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