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November gas pulls back with milder weather forecast

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November gas pulls back with milder weather forecast

After advancing 1.1 cents to settle at $3.000/MMBtu ahead of the weekend, NYMEX November gas recoiled overnight leading up to the Monday, Oct. 16, open in renewed selling amid overbought conditions and anticipation of moderating weather that looks to drive down demand. At 7:18 a.m. ET, the contact was down 4.7 cents at $2.953/MMBtu.

Revisions to the National Weather Service forecast maps show above-average temperatures blanketing the entire eastern two-thirds of the country and portions of the West in the upcoming six- to 10-day period, then receding from almost the entire central U.S. but lingering over much of the East Coast and moving into most of the West further out to the eight- to 14-day period.

Average to below-average temperatures encompass the remainder of the West in the shorter-range view, then below-average temperatures disappear and average temperatures overtake the area of the central U.S. vacated by the heat in the longer-range period.

Returning mild weather to major demand centers in the central U.S. should diminish lingering cooling load and keep heating demand at bay, which should allow for natural gas to flow more freely into underground storage and accelerate the pace of inventory rebuilding in the coming weeks.

Net storage injections thus far in the refill season have totaled 1,544 Bcf, or 15% lower than the five-year average of 1,817 Bcf, according to the U.S. Energy Information Administration.

The latest storage data from the EIA outlined a net 87-Bcf injection for the week ended Oct. 6 that took total working gas stocks to 3,595 Bcf, or 153 Bcf below the year-ago level and 8 Bcf below the five-year average of 3,603 Bcf. The reported build matched the five-year-average addition and exceeded the 79-Bcf injection seen in the corresponding week in 2016.

Although currently trailing the five-year average, the EIA expects inventories to end the refill season near the norm.

A continuation of the slower-than-normal pace of storage rebuilding through the balance of the refill season is estimated to drive end-of-season inventories of 3,834 Bcf, while injections at par with the five-year average are projected bring working gas stocks to a total of 3,842 Bcf at the close of the season, the EIA said.

In cash action, the revised natural gas offering booked on Oct. 13 for Saturday-through-Monday flow was moved at mixed but mostly higher values, as weather-related demand support combined with pressure from the typical weekend inclusion in the package.

Looking at the key hubs, an 82-cent decline steered Transco Zone 6 NY spot gas price activity to an index at $1.250/MMBtu, as a roughly 1-cent slump nudged Chicago next-day gas pricing to an average at $2.757/MMBtu. Conversely, a near 4-cent increase took benchmark Henry Hub day-ahead gas price action to an average at $2.989/MMBtu, as an almost 2-cent uptick brought PG&E Gate hub pricing to an index at $3.176/MMBtu.

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On a regional basis, Northeast day-ahead gas price action added about 13 cents to average at $2.214/MMBtu, as Midwest spot gas pricing logged a roughly 4-cent gain in trades averaging at $2.725/MMBtu. Gulf Coast cash gas prices rose by nearly 5 cents on average to an index at $2.834/MMBtu, as West Coast next-day gas price activity eased by 1 cent against the wider uptrend to an index at $2.414/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.