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June natural gas futures advance ahead of contract expiration

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June natural gas futures advance ahead of contract expiration

Editor's Note: Please be advised that S&P Global Market Intelligence will no longer publish daily articles on price trends in the U.S. natural gas, electricity and emissions markets beginning June 1, 2018. Pricing data for these energy markets will continue to be available on the Market Intelligence platform.

Following a scant 0.1-cent slump to settle near unchanged at $2.939/MMBtu ahead of the long Memorial Day weekend, NYMEX June natural gas futures ticked higher overnight leading up to the Tuesday, May 29, open and the contract's roll off the board at the close of business. At 6:45 a.m. ET (1045 GMT) June futures were 1.1 cents higher at $2.950/MMBtu. Poised to take the lead, the July contract was 2.3 cents higher at $2.986/MMBtu.

Subtropical Storm Alberto has weakened to a subtropical depression over the southeast U.S., keeping at bay threats to offshore U.S. natural gas production. Supply levels remain susceptible to risks, however, as the arrival of seasonable summer weather looks to boost cooling demand and limit the amount of natural gas available to flow into still-diminished underground storage.

According to a 4 a.m. CT, May 29, advisory from the National Hurricane Center, subtropical depression Alberto that was last seen tracking north-northward at about 13 mph is projected to move over the Tennessee Valley on Tuesday and degenerate into a remnant low Tuesday evening, before tracking over the Ohio Valley and Great Lakes region on Wednesday and Thursday.

Further out, National Weather Service outlooks for both the six- to 10-day and eight- to 14-day periods reflect the prevalence of above-average temperatures across the country, with average to below-average temperatures seen confined to portions of the East Coast and the West in the shorter-range view and to the Eastern Seaboard, a few areas of the Midwest and Montana in the extended period.

Efforts to rebuild storage have started to slow down, as the season's first triple-digit injection of 106 Bcf in the week ended May 11 was followed by a 91-Bcf addition in the most recent inventory report week ended May 18.

Total working gas stocks currently sit at 1,629 Bcf, still 804 Bcf below the year-ago level and 499 Bcf below the five-year average of 2,128 Bcf.

Allaying supply worries, however, land rigs have been on a steady uptrend, signaling impending production growth. Baker Hughes' weekly rotary rig count data outlined an increase of 13 rigs in the week to May 25 to a total U.S. gas and oil rig count of 1,059, which includes 1,036 operating onshore.

Cash gas price activity was thoroughly mixed on May 25 on the back of fluctuating demand expectations through and coming off the long Memorial Day weekend, as traders moved a four-day offering for Saturday-through-Tuesday delivery.

Looking at the key delivery locations, less-than-1-cent gains on average brought PG&E Gate and benchmark Henry Hub spot gas prices to indexes at $3.062/MMBtu and $2.880/MMBtu, respectively. By contrast, a near 9-cent decline steered Transco Zone 6 NY day-ahead gas price action to an index at $2.646/MMBtu and a roughly 2-cent slump took Chicago hub activity to an index at $2.675/MMBtu.

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In regional terms, West Coast next-day gas pricing notched an approximate 3-cent increase in deals averaging at $1.968/MMBtu, as Gulf Coast cash gas price activity held near unchanged day on day at an index at $2.825/MMBtu. Northeast day-ahead gas prices fell by about 4 cents on average to an index at $2.395/MMBtu, as Midwest spot gas price action tacked on almost 2 cents on the session to average at $2.606/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.