Weekly Natural Gas Cash Prices Futures Surrender to Mother Nature’s meek winter mood

Spot natural gas prices fell for the week as subdued weather-driven demand overshadowed new signs of lower production and further output cuts.

NGI’s Weekly Spot Gas National avg. for the shortened trading period 20.-23. fell 23.5 cents to $1,550 in February.

Including the leading drop in cash prices for the week Southern Border, PG&E in the West 49.0 cents off $1,805 a Dracut in the East, down $2,235 to $2,825.

What’s more, at the beginning of the week, El Paso Natural Gas Pipeline declared force majeure on its 2000 line, boosting flows from the Permian Basin. Wow prices fell 36.0 cents to 55.0 cents as a result

Meanwhile, the Nymex March contract struggled for most of the week, although a brief midweek rally helped the fast month avoid a sharp weekly decline. It settled at $1.603/MMBtu and closed Friday, down 12.9 cents on the day and a hair lower than the previous week at $1.609.

Weather conditions have turned out to be very favorable over the past week, with mild temperatures affecting most of the Lower 48. The National Weather Service (NWS) forecast called for more of the same in late February and early next month.

However, production fell as low as 103 Bcf/d during the past week. That was still strong by historical standards — about 5 Bcf/d above year-ago levels — but down sharply from the record high of 107 Bcf/d hit earlier this month, according to Wood Mackenzie estimates.

What’s more, Chesapeake Energy, one of the nation’s largest natural gas producers, said yes cut rigs and fracking crews in the Haynesville and Marcellus shales. Chesapeake projected its natural production would fall from 3.24 Bcf/d at the end of last year to a 2024 average of about 2.7 Bcf/d.

The future it jumped nearly 20 cents on Wednesday in response.

StoneX Financial Inc.’s Thomas Saal, senior vice president of energy, told NGI that the news from Chesapeake boosted confidence that more producers will also pull back, helping to balance an overhanging market after months of near-record production and a soft heating winter. request.

“The market was expecting someone to step up and say prices are too low to economically produce at record levels,” Saal said. But Wednesday marked the week’s only advance. “We need to see more people following Chesapeake” to sustain any rally through the winter. “Prices are still pretty damn cheap. At the beginning of February, we start selling very intensively and not much is happening on the demand side.

“So in the meantime, we’re going to see bearish storage reports and other signs of imbalances that make it hard to say we’ve bottomed out,” Saal added. “I wouldn’t go that far.

See-Saw Futures

In addition to Wednesday’s recovery, the futures market moved lower during the week, even after Thursday’s US Energy Information Administration (EIA) inventory report.

EIA printed a 60 Bcf of natural gas pumping from the reservoir for the week ending in February. 16. It was far from the five-year draw average of 168 Bcf. Prior to the report’s release, estimates submitted to major polls had coalesced around the low to mid-60s Bcf. NGI modeled a decline of 65 Bcf.

The decline reduced inventories to 2,470 Bcf. However, inventories easily topped the prior year’s level of 2,205 Bcf and the five-year average of 2,019 Bcf. Inventory 22% above five-year average.

While Chesapeake’s guide to lower production has been accepted by the market, it has not been enough by itself to sustain growth, said Eli Rubin, senior analyst at EBW Analytics Group. He said traders remained fixated on lackluster heating demand and strong warehouse stocks.

“Weather-driven gas demand is eroding with warming expected through mid-March,” Rubin said. “The long-term fundamental outlook is weak.”

Production was also strong during the most recent EIA inventory period — nearly 105 Bcf/d — and weather-driven demand was modest, especially in Texas and surrounding states.

The Midwest and East regions reported withdrawals of 31 Bcf and 27 Bcf, respectively, according to the EIA. Mountain and Pacific stocks were down 5 Bcf.

In contrast, South Central reported an injection of 8 Bcf, reflecting mild weather and steady wind generation.

“Inventory changes continue to maintain a supply situation where gas inventories have been for several months,” said analysts at Gelber & Associates.

We look forward to the next EIA print covering a week in February. 23, analysts predicted another anemic move. Early estimates provided to Reuters included withdrawals of 84 Bcf to 113 Bcf, with an average decline of 97 Bcf. This compares to a five-year average decline of 143 Bcf.

Friday spot prices

Spot natural gas prices fell in most of the lower 48 in Friday trading with weekend supplies into Monday, hampered by spring weather in late February. NGI Spot Gas National Avg. lost 8.0 cents to $1,450.

NWS forecasts showed above-average temperatures in most of the lower 48 for the week ahead, with highs nearing 60 degrees at times in markets as far north as Minneapolis. Southern markets could see extended 70s and low 80s.

before that SoCal City Gate fell 33.5 cents day/day to average $2,450 a Dawn in the Midwest, they fell 7.5 cents to $1,615.

Houston Ship Channel fell 22.0 cents to $1,100 on Friday Florida Gas Zone 3 fell 9.5 cents to $1,490.

Northeast prices have proven to be the exception, with a weekend cold snap expected to hit New England and spur a jump in heating demand. Algonquin City Gate near Boston climbed from $1,045 to $3,140.

While temperatures are expected to be mild in the coming week, severe storms could occur across the central and eastern United States, AccuWeather meteorologist Alex Sosnowski said. This presents the possibility of both power outages and production interruptions.

“The potential for a multi-day outbreak of severe weather, including tornadoes, continues to increase Tuesday through Wednesday from parts of the Great Plains to much of the Mississippi, Ohio and Tennessee valleys,” Sosnowski said. “The risk of severe weather may also affect parts of the Appalachian Mountains and the East Coast on Thursday.”

The front could lead to “a strong jet stream that will veer east of the Rockies,” Sosnowski said. “In most of the central states ahead of the front, temperatures are likely to reach record high levels and remain at unusually high levels overnight. . . . All kinds of severe weather are possible.”

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