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June gas continues to eke out gains on weather, storage prospects

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

Essential Energy Insights - September 17, 2020

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


June gas continues to eke out gains on weather, storage prospects

Followinga 6-cent advance in the prior session to a finish at $2.158/MMBtu, June naturalgas futures remained biased to the upside overnight ahead of the Wednesday, May11 open on the back of supportive midrange weather and storage expectations.Trading to a $2.168/MMBtu high, the contract was last traded 0.4 cent higher at$2.162/MMBtu.

Mixedweather in store looks to generate a combination of cooling and heating demandthat should keep a lid on the amount of natural gas available to move into undergroundstorage facilities.

Accordingto the National Weather Service, below-average temperatures will engulf a largearea of the country encompassing the Northeast, Mid-Atlantic, Midwest, aportion of the Gulf Coast and much of the Rockies in the upcoming six- to10-day period, as average temperatures stretch from a narrow band in the Southinto much of the West. Above-average temperatures settle over portions of theSouth and a section of Washington.

Below-averagetemperatures shrink and shift in scope to be confined to most of the Westfurther out to the eight- to 14-day period, as above-average temperatureslinger over a patch of Washington and overtake nearly the entire South and amajority of the Midwest. Average temperatures settle over the Northeast, muchof the Mid-Atlantic, fringes of the Midwest and the balance of the West.

"Today'sforecast looks somewhat cooler in the 6-10 day period and somewhat warmer 11-15days out, which would often be seen as offsetting changes. However, as ithappens it looks like population weighted degree day accumulations suggestmarginally stronger demand for both periods, with somewhat higher late seasonheating demand in the Midwest and Northeast next week, and stronger coolingdemand thereafter," Citi Futures analyst Tim Evans said.

Shouldweather-driven demand limit subsequent storage injections, there would be acontinuation of what has thus far been a slow pace of inventory-building.

Anet 68-Bcf additionto stocks reported by the U.S. Energy Information Administration in its lateststorage data covering the week to April 29 brought cumulative net inventorybuild thus far in the 2016 injection season to only 145 Bcf, versus thefive-year average of 183 Bcf and the year-ago tally of 292 Bcf.

Preliminaryestimates for the next weekly storage data due out on Thursday, May 12, thatwill cover the week to May 6 suggest a continuation of the lackluster inventorybuilds, as traders and analysts anticipate an addition to stocks of anywherefrom 52 Bcf to 62 Bcf that will compare against a 101-Bcf injection during thesame week last year and a 79-Bcf five-year-average injection.

Yet,the upside derived from weather-related demand expectations and storageprospects in the midrange looks to be short-lived, with robust supplies poisedto reignite bearish sentiments going forward.

Despitethe slow start to the refill season, the EIA said in its latest "Short-term Energy Outlook"that natural gas inventories should begin the winter heating season at arecord-high of 4,158 Bcf.

Incash activity, supportive weather and demand drove natural gas pricing forday-ahead delivery higher in much of the country Tuesday.

Acrossthe key delivery locations, gains of between 5 cents and 6 cents on averagetook Chicago and PG&E Gate spot gas price action to indexes at $2.017/MMBtuand $2.168/MMBtu, respectively, as an uptick of about 3 cents steered benchmarkHenry Hub cash gas price activity to an index at $2.039/MMBtu. Running contraryto the dominant uptrend, a reduction of almost 14 cents goosed Transco Zone 6NY hub pricing to an index at $1.663/MMBtu.

On aregional basis, Midwest and Gulf Coast next-day gas price activity climbed byroughly 5 cents on average to indexes at $1.965/MMBtu and $1.927/MMBtu,respectively. West Coast spot gas pricing rose by around 3 cents in dealsaveraging at $1.801/MMBtu, as Northeast cash gas price action slumped by nearly1 cent against the wider advance to an index at $1.841/MMBtu.

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Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.