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June gas futures regain ground amid slower production

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


June gas futures regain ground amid slower production

Aftersinking 13.6 cents to a settle at $2.042/MMBtu in the week's opening session,June natural gas futures worked higher overnight ahead of the Tuesday, May 3,open, as the market contemplates the implications of a production slowdownagainst a backdrop of mild weather and storage building. The contract was lasteyed 2.5 cents higher at $2.067/MMBtu.

Fundamentalsremain lackluster as weather outlooks were revised to show above-averagetemperatures gripping the majority of the Northeast, Mid-Atlantic andSoutheast, along with a portion of the north central U.S. and the West in thesix- to 10-day period. The above-average temperature will expand from the Westto include a larger portion of the central U.S., while receding in the East toinclude mostly the coastal areas spanning from the Northeast into Florida inthe eight- to 14-day outlook.

Below-averagetemperatures hold to the central U.S. in both forecasts. In the six- to 10-dayoutlook the cooler air will span from portions of Indiana and Illinois downinto portions of Mississippi, Louisiana and Texas, before expanding in theeight- to 14-day period to overtake the majority of the south-central U.S. andportions of the Midwest.

Theweather mix that will leave the remaining portions of the country under averagetemperatures should limit the call for either cooling or heating in the weeksahead and allow natural gas inventories to add on to already healthy levels.

Naturalgas inventories currently sit at 2,557 Bcf, some 870 Bcf above the year-agolevel and 832 Bcf above the five-year average storage level of 1,725 Bcf, afterthe U.S. Energy Information Administration reported a larger-than-anticipated73-Bcf injection into the natural gas supply in the week to April 22.

Concernsof a slowdown in production, however, continue to undermine losses as themarket considers a record low U.S. drilling rig count and recent evidence of adecline in output.

Supplywoes were heightened by reports of the explosion Friday on the Texas Easternpipeline in Salem Township in Westmoreland County, Pa., and , parent ofTexas Eastern Transmission LP,said in a May 2 incident update that the return of capacity through the Delmontcompressor station, forced shut due to the explosion, remains unknown and willremain at zero through May 6.

Spectrasaid it is working with the Pipeline and Hazardous Materials SafetyAdministration on a return-to-service plan for the additional Texas Easternlines that had been isolated out of caution, but that it was not aware of anydownstream reliability issues due to the outage.

Spotgas markets were higher as the fresh week began, with pronounced gains in theNortheast supported by the force majeure event declared by Texas Eastern onApril 29 as the result of the unplanned outage downstream of its DelmontCompressor Station in Delmont, Pa.

Inthe Northeast, Transco Zone 6 NY added 39.6 cents to an index at $1.856/MMBtu.Elsewhere gains were far more modest as the Henry Hub moved up 1.9 cents to anindex at $1.910/MMBtu, Chicago added 4.9 cents to $1.982/MMBtu and PG&EGate lifted 5 cents to $2.016/MMBtu.

Regionally,the Northeast gained 14.7 cents to an index at $1.952/MMBtu, the Midcontinentwas boosted 2.8 cents to $1.900/MMBtu, the Gulf Coast gained 1.8 cents to$1.823/MMBtu and the West was 4.5 cents higher at $1.706/MMBtu.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storagedata, go to our Natural GasStorage Page.