Bidweek gas prices tumble into 2020, January US-wide price weakest on record

Houston — January 2020 bidweek natural gas prices entered the new year on a downward slide as prices across nearly all regions of the US declined on expectations for a mild first month of the year, putting the national average at the lowest settlement level since the first Platts January price in 2003.

According to S&P Global Platts Inside FERC monthly assessments published Thursday, the January national average came in at $2.44/MMBtu, edging out the prior lowest settle in 2016 by a few cents to claim the mantle of lowest January on record.

Nearly every region moved lower by double-digit percentage points from December, with the Rockies sliding 22%, the largest difference, driven by Northwest, Canadian Border (Sumas) declining $2.97/MMBtu month on month to settle at $3.73/MMBtu.

Elsewhere in the North American market, Henry Hub exemplified the level of decline in the Southeast market by dropping 31 cents to $2.16/MMBtu, while maintaining status as the premium index in the region.

Chicago city-gates cleaved 44 cents off the prior month's figure to settle at $2.30/MMBtu, while MichCon city-gate dropped to $2.03/MMBtu, one of the lowest pricing levels for January since 2000.

Not all prices were bearish though, with the Northeast market moving higher at key demand locations, such as Algonquin Gas Transmission city-gates, which tacked on $1.37/MMBtu to settle at $6.45/MMBtu for January.

Iroquois, zone 2 added $1.40/MMBtu to settle at $6.46/MMBtu as net inflows through the upstream Waddington interconnect continue to remain elevated compared with historical levels into January.

In a wider context, despite the regional month-on month-increase, US Northeast monthly pricing currently sits 40% below year-ago levels, with Algonquin city-gates' current January pricing the lowest January level since 2012.

While bearish signals dominated January bidweek, the North American market is exiting a December that averaged the second highest demand level of the past nine years, hovering around 95.4 Bcf/d, S&P Global Platts Analytics data showed, signaling the impact elevated production levels - alongside expectations for unseasonal temperatures in January - are having on pricing.

The latest US National Weather Service monthly forecast - released in late December - projects above-average temperatures throughout January, enveloping the key heating demand markets of the Northeast and Upper Midwest in unseasonably warm weather, likely extending the bearish tone to the regional spot market.

-- Ryan Ouwerkerk, ryan.ouwerkerk@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com