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May gas futures probe upside overnight in buying at lows

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

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Essential Energy Insights - January 2021


May gas futures probe upside overnight in buying at lows

Aftertumbling by 7.8 cents in the week's opening session to a settle at$1.912/MMBtu, May natural gas futures ticked higher overnight ahead of theTuesday, April 12, open in bargain hunting following prior-day losses, albeitwith little in the way of fundamental support, as imminent spring warming inoutlooks that should keep demand lackluster continues to feature alongsidehefty supplies. After covering a range of $1.922/MMBtu to$1.944/MMBtu in overnight trade, the front-month contract was last traded 2.8cents higher at $1.940/MMBtu.

Theupdated National Weather Service forecast for the six- to 10-day period showsabove-average temperatures enveloping the bulk of the country, leaving only a portionof the Rockies, a tiny patch of the Midwest and much of the Gulf Coast in thescope of average to below-average temperatures.

Above-averagetemperatures overtake more of the country in the eight- to 14-day outlook,shrinking the scope of average temperatures to just the southern tier of Texas,just as below-average temperatures exit the country.

Althoughabove-average temperatures in store could generate early cooling load, lowerhigh temperatures associated with spring warming are not expected to usher insignificant gains in cooling demand.

Absentsubstantial demand, natural gas should flow more freely into undergroundstorage facilities, allowing for a changeover from weekly storage withdrawalsto a long period of inventory injections in the coming weeks that would augmentalready robust stock levels.

Overallnatural gas inventories remain at a fresh record-high end-of-March level of2,480 Bcf, after the U.S. Energy Information Administration reported a net12-Bcf addition tostocks in the week to April 1 that was the final storage report week of thetitular withdrawal season. Stocks currently sit 1,008 Bcf above the year-agolevel and 874 Bcf above the five-year average of 1,606 Bcf.

Forthe next weekly storage data due out from the EIA on April 14 that will coverthe week ended April 8, traders and analysts anticipate anywhere from adrawdown of 13 Bcf to an injection of 10 Bcf, which will compare against a22-Bcf five-year-average build and a 49-Bcf addition to stocks in the same weekin 2015.

Incash activity, natural gas values for next-day delivery predominantly unraveledApril 11, as weakness at the futures arena combined with prospects for softerdemand in much of the country as the new workweek unfolds.

Acrossthe major delivery locations, the charge lower was led by the benchmark HenryHub cash gas price action that shed more than 9 cents on the session to averageat $1.897/MMBtu. Chicago day-ahead gas pricing followed with a near 8-centretreat to an index at $1.910/MMBtu, as did PG&E Gate hub price activitythat gave back a little more than 3 cents in transactions averaging at$1.891/MMBtu. Bucking the downtrend, however, were Transco Zone 6 NY spot gasprices that advanced also by a little more than 3 cents on average to an indexat $1.721/MMBtu.

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Regionalaverages were tethered to the downside overall. Next-day gas pricing on theGulf Coast and Midwest faltered by around 7 cents on average to indexes at$1.792/MMBtu and $1.821/MMBtu, respectively, as West Coast spot gas priceaction deflated by about 5 cents to average at $1.614/MMBtu and Northeast cashgas price activity crumbled by near 34 cents to an index at $1.840/MMBtu.

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Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.