Weekly natural gas cash prices vary by Late Chill support

Weekly cash natural gas prices were mixed during the week as some regions were supported by cold weather-driven demand, offset by expanding storage gluts and plans by Freeport LNG to take two trains offline.

NGI’s Weekly Spot Gas National avg. rose 13.0 cents/MMBtu to $1.355 in the March 18-22 trading period. Central values ​​in West Texas were mostly mired in the negative due to excess storage, and prices in the Northeast were rising.

Among the top winners, Algonquin City Gate added 56.5 cents to $1,925 as the early spring winter reasserted itself.

Texas mushroom values ​​tried to rally mid-week, but efforts to pull back from negative territory ultimately failed and most mushrooms ended the week in the red. Wow fell 31.5 cents to minus 54.5 cents, while Permian El Paso fell 39.5 cents to minus 57.5 cents.

In futures markets, the Nymex April natural gas contract settled at $1.659/MMBtu on Friday, down 2.4 cents on the day and less than a cent above $1.655 last week.

Futures were looking for a positive week that got an early boost from Lower 48 production. According to Wood Mackenzie data, production averaged 100.7 Bcf/d over the past seven days, suggesting producer cuts are holding.

However, the positive dynamics reversed in the middle of the week. News from Freeport renewed the decline and an atypical storage build for the third week of March kept pressure on prices.

Freeport said Wednesday that Train 3 at its LNG terminal in Texas was back online and LNG production after months of repairs, but Train 2 was offline and Train 3 would be shut down “immediately” for inspections and possible repairs. Work on both trains will be completed sometime in May, Freeport said.

Analyst at Tudor, Pickering, Holt & Co. (TPH) Matt Portillo said, “Long outages will lead to downside risk to our natural gas demand estimates in the near term, with two more trains offline through May adding 40 Bcf to our storage estimate.”

TPH estimates reserves at the end of the injection season on October 31 at about 4.0 Tcf.

The losses continued after the US Energy Information Administration (EIA) announced a 7 injections of Bcf to natural gas stocks for the week ending March 15. Construction was within a wide range of analysts’ expectations. The print lifted the total working gas stockpile to 2,332 Bcf, bringing excess storage to 678 Bcf above the five-year average.

Industry observers said the construction would not bring an early start to the grouting season, which typically begins on April 1.

Initial estimates provided to Reuters for the EIA’s inventory report for the week ended March 22 ranged from 24 Bcf to 44 Bcf, with an average decline of 33 Bcf. That draw would compare to a withdrawal of 55 Bcf during the same week last year and a five-year average decline of 27 Bcf.

Weather changes

March came out like a lion, supporting an expected return to stockpiling. The warmest winter on record officially ended on March 19 and transitioned into spring, with weather systems tracking cold, rain and snow across parts of the country.

“Even if weather-driven demand spikes this week and the potential Bakken freezes by the end of March, it could take several weeks for the North American storage glut, which has grown to 900 Bcf, to gradually erode,” said EBW Analytics Group analyst Eli Rubin.

The long-term fundamental outlook is strengthening, Rubin said. “It will take an extended period of low natural gas prices this spring to sustain price-driven demand in the energy sector and encourage producers to keep supply off the market,” he said.

The weather was better than the past two months, providing enough demand to improve surpluses slightly, NatGasWeather said

Finally, the firm said the weather will turn bullish and work in line with tighter Lower 48 production to materially reduce surpluses. “It’s just a matter of when and if natural gas markets become more impatient.”

Friday Cash Market

Prices were mixed for spot gas traded on Friday with delivery from Saturday to Monday. Weather-driven demand pushed some nodal prices higher, while softening weekend loads faced most regional averages down day-to-day.

NatGasWeather said weather systems would track northern parts of the country through the weekend with rain, snow and freezing lows in the 10s to 30s. The southern half of the country was expected to be “quite nice overall most days with highs in the 50s to 80s.” the company said.

A chill in the Northeast sent prices up 1.5 cents Algonquin City Gate to $1,820. The inclusion of weekend days in the three-day package reduced the prices to Transco Zone 6 NY by 6.0 cents to $1,460 a PNGTS without borders a more impressive 29.0 cents in light trade to $1,915. Tea Northeast Regional Avg. was unchanged at $1,805 on combined center activity.

West Texas posted more impressive losses, with prices falling deeper into the negative as substantial supply meets lackluster demand. Wow down 34.5 cents day/day to minus 70.0 cents and a loss of 25.5 cents on Permian El Paso smells average to minus 60.0 cents.

In Canada, Westcoast Station 2 traded in mild negative territory after Westcoast Transmission issued an operating flow order indicating high packing. Hub traded down at negative 0.5 cents but averaged C$1.27/GJ.

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