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November gas drifts into positive territory ahead of week's opening session

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November gas drifts into positive territory ahead of week's opening session

After closing 6.0 cents lower at $2.863/MMBtu ahead of the weekend, NYMEX November natural gas futures extended losses overnight before probing the upside leading up to the Monday, Oct. 9, open, amid pressure from the demand-side impact of the now-downgraded Tropical Depression Nate. The contract stumbled to a $2.835/MMBtu overnight low, but drifted into shallow positive territory, trading 0.8 cent higher at $2.871/MMBtu at 6:44 a.m. ET.

Nate made landfall on the Gulf Coast the night of Oct. 7, resulting in 111,913 customer outages scattered across Alabama, Florida and Mississippi, as of 2:15 p.m. ET on Oct. 8, according to a Department of Energy event report.

Nate has since weakened, but is still expected to unleash heavy rainfall as it approaches the Northeast at the start of the workweek. "Nate will track across the central Appalachians and New England Sunday night through Monday night," AccuWeather.com meteorologist Jordan Root said in an Oct. 8 outlook. "It will still be packing plenty of tropical moisture that will fuel heavy rain across a region that has been on the edge of drought conditions over the past couple of weeks."

Post-Tropical Cyclone Nate was about 20 miles southwest of Akron, Ohio, packing maximum sustained winds of 20 mph as it moves northeast at 60 mph, the National Hurricane Center said in a 5 a.m. ET update Oct. 9.

Diminished demand resulting from the storm is undermining support from curtailed production. The Bureau of Safety and Environmental Enforcement reported that roughly 77.7% of Gulf of Mexico natural gas production, equivalent to 2.5 Bcf/d, remains offline, as of Oct. 8. In addition, 1,620,612 barrels of oil per day remains shut in, or about 92.6%, of total regional oil output.

In the weeks ahead, warmer weather should prevail, as National Weather Service forecasts show above-average temperatures stretching over nearly the entire eastern two-thirds of the country and portions of the Southwest in the upcoming six- to 10-day period then overtaking the entire eastern two-thirds and the bulk of the Rockies further out to the eight- to 14-day period.

Warmer weather in store could offer some upside momentum for demand, but lower high temperatures associated with above-average temperature readings at this time of the year could limit weather-related demand support.

The impact of current and midrange weather on supply and demand will affect subsequent storage injections, as market participants begin to look toward end-of-season inventories.

Total working gas stocks currently sit at 3,508 Bcf, or 161 Bcf below the year-ago level and 8 Bcf below the five-year average of 3,516 Bcf, after the U.S. Energy Information Administration outlined a net 42-Bcf injection for the week ended Sept. 29 that was below both the 91-Bcf five-year-average build and a 76-Bcf addition seen in the corresponding week in 2016.

Net storage injections thus far in the refill season are 16% lower than the five-year average, according to the EIA. A continuation of the slower-than-normal pace of storage rebuilding through the balance of the refill season would bring end-of-season inventories to 3,782 Bcf, while injections at par with the five-year average would bring working gas stocks to a total of 3,834 Bcf at the close of the season, the agency said.

In cash trading, the revised natural gas offering moved on Oct. 6 for Saturday-through-Monday flow predominantly shed value amid pressure from the inclusion of the low-demand weekend days in the package.

Among the key hubs, the downtrend was led by Transco Zone 6 NY spot gas prices that fell by almost 19 cents on average to an index at $2.573/MMBtu. Chicago next-day gas price action followed with a near 9-cent retreat in deals averaging at $2.707/MMBtu, then PG&E Gate hub activity that unraveled about 7 cents to average at $3.087/MMBtu and benchmark Henry Hub day-ahead gas pricing that eased by less than 1 cent to an index at $2.928/MMBtu.

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On a regional basis, Northeast cash gas price activity deflated by roughly 10 cents to average at $2.010/MMBtu, as Midwest spot gas pricing faltered by approximately 8 cents to an index at $2.607/MMBtu. West Coast day-ahead gas price action notched an almost 5-cent reduction in trades averaging at $2.349/MMBtu, as Gulf Coast next-day gas prices recoiled by near 7 cents on average to an index at $2.736/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.