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Forwards recap: Term prices biased lower as June gas rolls off board


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Forwards recap: Term prices biased lower as June gas rolls off board

Mostly lower moves were noted across major term markets in the U.S. during the week that ended May 26 as a decline in fueling cost that was attributed to losses in futures offset expectations of elevated demand suggested by weather forecasts.

Looking at the natural gas futures arena, the front-month June contract kicked off the review week May 22 with a 7.4-cent gain fueled by weather outlooks suggesting modest heating and late cooling demand, which sent it to $3.330/MMBtu. Amid sentiments of overbought conditions, June gas revisited the downside May 23 with the front-month contract tumbling by 11.1 cents to $3.219/MMBtu.

Early gains turned to modest losses during the midweek May 24 session as changes in weather forecasts offered less support for the market, sending the June contract a penny lower to $3.209/MMBtu. Reports of a larger-than-expected 75-Bcf net injection during the week that ended May 19 put more supply-side pressure on June gas, which closed the May 25 session down 2.5 cents at $3.184/MMBtu with options expiring as well.

June gas ended its run as the front-month contract May 26 supported by weather forecasts implying an increase in electric power-sector demand alongside a boost in demand for liquefied natural gas, helping it roll off the board 5.2 cents higher at $3.236/MMBtu. Not far behind, the upcoming July contract closed the review week up 3.5 cents at $3.310/MMBtu. Following the expiration of the June contract, front-month gas tumbled by 9.4 cents overall during the review week spanning May 22-26.

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The lower settle in front-month gas futures suggested a fall in fueling costs, which pulled down most major markets across the country, but with weather forecasts calling for strong demand helping some locations stay on the positive side of the ledger.

Encompassing the review week's bearish sentiment were June deals at PJM Northern Illinois, which was traded at $35.27 on May 22 and $33.72 on May 26, down 4% for the period.

Flat to lower moves were posted across other hubs in the central U.S. MISO Indiana June noted a 3-cent gain throughout the week in trades done at $36.61 on May 22 and $36.64 on May 26. A loss of $1.09 was notched at PJM AEP-Dayton, where prompt-month power changed hands at $36.67 on May 22 and $35.58 on May 26.

Losses also engulfed wholesale power markets along the eastern seaboard. In the mid-Atlantic, term deals at PJM West slipped 4% over the week and changed hands at $36.62 on May 22 and $35.15 on May 26. In the Northeast, June power at New York Zone G shed 4% during the period with transactions posted at $36.50 on May 22 and $35.17 on May 26. At NEPOOL-Mass, June power deals were quoted at $35.72 on May 22 and $34.50 on May 26, for a weekly loss of 3%.

Along ERCOT North's forward curve, June deals were assessed at $32.35 on May 22 and $31.68 on May 26, shedding 2% through the period.

Forecasts calling for elevated demand helped term markets in the West notch gains despite potentially lower fueling costs. In the Northwest, Mid-Columbia trades gained 5% during the week and opened at $19.04 on May 22 and $19.95 on May 26. Prompt-month power at Palo Verde added 4% over the period with deals valued at $32.93 on May 22 and $34.15 on May 26. June transactions at South Path-15 traded at $32.47 on May 22 and $33.39 on May 26, for a 3% weekly premium.

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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, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.