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In This List

May gas extends gains in response to production estimates

Essential Energy Insights - September, 2020

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Utilities, midstream reckon with energy transformation on the horizon

May gas extends gains in response to production estimates

Following a finish up 9.2 cents to a settle at $2.004/MMBtu,May natural gas futures extended higher overnight, adding another 2.6 cents totrade last at $2.030/MMBtu.

The market continues in response to the latest Drilling ProductivityReport from the Department of Energy that projects a 1.1% decline in U.S. shalegas production for May. The data issued April 11 shows that total output ofnatural gas across seven key shale plays is likely to fall 490.15 MMcf/d in Mayfrom April, or about 1.1%, to 45.93 Bcf/d compared to 46.42 Bcf/d in April.

The market is responding to the anticipation that theproduction slowdown will spearhead the rebalancing of the market, as lowerproduction combined with warmer weather should begin to work the excessivenatural gas supply down from the fresh end-of-season record high level of 2,480Bcf.

Market estimates for the upcoming storage report to bereleased April 14 by the U.S. Energy Information Administration range from awithdrawal of 13 Bcf to an injection of 10 Bcf for the week ended April 8. Thefigure will compare to a five-year average injection of 22 Bcf and a 49-Bcfaddition recorded during the same week in 2015.

On the demand side, near to medium-term support should proveto be lackluster in the coming weeks, as the market enters the thick of theshoulder season. The National Weather Service forecast map for the six- to10-day period is calling for above-normal temperatures across most of the U.S.The agency is projecting average readings for much of Texas and a portion ofthe south-central U.S. during the period.

In the eight- to 14-day outlook, above-average temperaturesare expected to envelop the majority of the country, with average conditionsexpected across portions of the Northeast and Texas in the extended period.

In day-ahead trading Tuesday deals were supported byfutures' gains. Transco Zone 6 NY posted a 4.7-cent gain to an index at$1.768/MMBtu, the Henry Hub spot price ticked up 7.5 cents to an index at$1.972/MMBtu. At the Chicago hub deals averaged $1.906/MMBtu, adding 0.4 centto the prior-day index, while PG&E Gate found an index at $1.937/MMBtu, up4.6 cents.

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Regionally, the Northeast added 36.0 cents to an index at$2.20/MMBtu, the Gulf was up 5.4 cents to $1.845/MMBtu, Midcontinent priceaction found an index 4.4 cents higher at $1.864/MMBtu and the West was up 3.6cents at $1.650/MMBtu.

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Market pricesand included industry data are current as of the time of publication and aresubject to change. For more detailed market data, including power, naturalgas and coal indexprices, as well as forwards and futures, visitour Commodities Pages.