Spot gas prices soar in June amid extreme heat wave in West region

The average price of natural gas for day-ahead delivery in June soared in all regions of the U.S. as temperatures broke records in a regionwide heat wave across the West.

During the month, spot gas price indexes in all U.S. regions increased from the same prior-year period, with most of them exceeding the $3/MMBtu mark. The West region took the lead as it posted the highest yearly gain of nearly 113% to a spot gas index of $3.234/MMBtu. The Gulf Coast and Mid-Continent regions followed next with spot gas indexes of $3.112/MMBtu and $3.035/MMBtu, respectively. Only the Northeast region, which recorded a year-over-year increase of almost 80%, posted a spot gas price index of less than $3/MMBtu.

On a monthly basis, all the U.S. regions posted higher spot gas price indexes compared to those recorded in May.

The steep increase in spot gas prices came as temperatures surged in the western part of the U.S. over a six-day period in mid-June. Temperatures hit 118 degrees in Arizona, 107 degrees in Utah and 108 degrees in Montana, the U.S. National Oceanic and Atmospheric Administration said June 23.

During the month, gas hubs in the West region saw year-over-year gains ranging from 83.26% to as high as 169.58%. The SoCal Citygate hub, which recorded a yearly boost of almost 153%, saw the highest spot gas index price at $4.948/MMBtu. The PG&E Gate and El Paso-S Mainline gas hubs recorded the next highest spot gas price indexes at $4.394/MMBtu and $4.341/MMBtu, respectively.

In terms of production, the U.S. Energy Information Administration in its monthly "Drilling Productivity Report" released June 14 projected that total shale gas production would climb from 84.25 Bcf/d in June to 84.30 Bcf/d in July. Appalachia, the biggest shale gas-producing region in the U.S., is forecast to increase production from approximately 34.59 Bcf/d in June to 34.60 Bcf/d in July.

The Haynesville and Permian regions are also expected to see production rise in July, to 13.08 Bcf/d and 17.67 Bcf/d, respectively. Meanwhile, the Anadarko, Bakken, Eagle Ford and Niobrara regions are anticipated to post decreases in gas production in July.

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