US East Texas and Southeast spot natural gas prices hit 7-year summer highs in June

US natural gas spot prices at the Agua Dulce, Henry Hub, and Transco Zone 4 terminals in June hit their highest average summer prices since June 2014.

In June 2021, natural gas spot price averaged $3.70/MMBtu at Agua Dulce, $3.78/MMBtu at Henry Hub, and $3.76/MMbtu at Transco Zone 4. Prices at these terminals averaged 30% higher in 2021 than the prior six years, from 2020-2015. The previous highs reached in June 2014, following the polar vortex, averaged 10% higher at $4.20/MMBtu at Agua Dulce, $4.10/MMBtu at Henry Hub, and $4.11/MBtu at Transco Zone 4.

Tighter US natural gas supply and demand balances in recent months contributed to the price increases. Feedgas demand for LNG, which hit record high export levels in the first half of 2021, has reduced the availability for domestic consumption. US exports of LNG averaged 9.6 Bcf/d in the first six months of 2021, up 42% from the same period in 2020, according to data from the US Energy Information Administration. In the week of Aug. 3-10, the price for US spot LNG cargo reached new record levels above the $14 mark, with the Platts Gulf Coast Marker (GCM) assessed at $14.40/MMBtu on Aug. 10.

Above-average temperatures have also increased natural gas consumption for electric power. According the National Oceanic and Atmospheric Administration, June 2021 was the hottest June on record for the US. The average June temperature across the contiguous US was 72.6 degrees F (4.2 degrees above average), surpassing the record set in June 2016 by 0.9 of a degree.

A tightening supply picture has also bolstered prices, as EIA estimates US natural gas inventories ended July 2021 at nearly 2.8Tcf, 6% lower than the five-year average (2016–20) for this time of year. US consumption of natural gas is set to average 82.5 Bcf/d in 2021, down 1% from 2020. In summary, the EIA predicts inventories will end the 2021 injection season, which concludes at the end of October, at 3.6 Tcf, 4% below the five-year average.