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June natural gas futures steadying as market seeks fresh support

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Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

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


June natural gas futures steadying as market seeks fresh support

The Junenatural gas futures contract ended the session much as it began Monday, May 9, aftertrading near unchanged through the session in the middle of the technical tradingrange bound by $2.04/MMBtu at the low end and $2.17/MMBtu at the upside. The contracttopped the session at $2.126/MMBtu and touched a low of $2.080/MMBtu before endingthe session 0.3 cent lower at $2.098/MMBtu.

Marketdirection remains reliant on weather as the fulcrum for demand and forecasts implyrelative demand strength with below-average temperatures engulfing a large portionof the country in the six- to 10-day outlook.

The latestupdated forecasts from the National Oceanic and Atmospheric Administration showbelow-average temperatures in most of the Northeast, across the Mid-Atlantic intoportions of the Southeast, through the Midwest into a large portion of the centralU.S. and into a portion of the Northwest in the six- to 10-day period, while below-averagetemperatures scatter across portions of the Northeast and areas in the north-central,west-central, Rockies and West in the eight- to 14-day period.

Above-averagetemperatures will grip the southern portion of the country spanning from Georgiaacross a portion of the Gulf Coast through Texas, as well as portions of the Westin the six- to 10-day period. In the eight- to 14-day outlook the above-averagereadings expand up from the Southeast and Gulf Coast to overtake larger portionsof the East and central U.S., while receding in the West to grip a smaller areain the north.

Withthe mix of above- and below-average temperatures combining with the remaining areaswhere average temperatures are anticipated, some demand is expected to keep naturalgas inventories building at a slower pace than last year and the five-year average.

The U.S.Energy Information Administration saidcumulative net injections into working gas total 145 Bcf thus far in the 2016 refillseason, compared with the five-year average of 183 Bcf and last year's tally of292 Bcf during the same period. Stocks still remain near record highs for this timeof year, and that level of supply remains a weight on natural gas values.

EIA storagedata outlined a buildof 68 Bcf for the week to April 29, which was below the 77-Bcf injection reportedfor the same week in 2015, but was better than the five-year average injection of64 Bcf and brought total U.S. working gas supply to 2,625 Bcf, some 861 Bcf abovethe year-ago level and 836 Bcf above the five-year average storage level of 1,789Bcf.

Naturalgas inventories are forecast to rise again with this week's report that will coverthe week to May 6. Early projections call for builds spanning 52 Bcf to 62 Bcf thatwill compare against a 101-Bcf injection during the same week last year, and a 79-Bcffive-year-average injection.

In spotgas trade, markets were predominantly higher coming off the weekend break with mixedweather providing support across the country.

is continuingwork on the Texas Eastern natural gas pipeline following the April 29 explosionand subsequent fire on a portion of the pipeline in Salem Township, Pa. saida force majeure remains in effect as of May 9, and due to the ongoing force majeure,it has restricted interruptible, secondary out-of-path, secondary in-path and aportion of primary firm nominations flowing through the Delmont Compressor Station.

TexasEastern will not allow any increases in receipts sourced from points west of Delmontfor delivery to points east of Delmont on the Penn Jersey Line, the company said.

Northeastmarkets were sharply higher with transmission issues adding to demand projectionsto drive the price. Transco Zone 6 NY traded more than 30 cents higher to an indexaround $1.75 and TETCO-M3 trades were more than 15 cents higher to an index around$1.60.

Elsewhere,weather-related demand support drove sharp gains. Henry Hub deals were nearly 15cents higher to an average nearing $2.00, Waha traded about 20 cents higher to anindex around $1.90, Chicago gained nearly 10 cents to an index around $1.95, CIGadded more than 15 cents to an index atop $1.80, while in the West, SoCal Bordertrades were nearly 25 cents higher to an index nearing $2.00 and PG&E Gate addedabout 15 cents to an index atop $2.10.

Market prices and included industrydata are current as of the time of publication and are subject to change. For moredetailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storage data,go to our NaturalGas Storage Page.