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June gas futures pull into lead weighed down by storage, weather prospects

Takingthe lead from the May gas contract that rolled off the board in the priorsession down 3.7 cents at a finish at $1.995/MMBtu, June natural gas futureswere biased to the downside overnight ahead of the Thursday, April 28, open,amid the combined pressure of expectations for an uptick in the pace ofstorage-building when the next weekly inventory report is released atmidmorning and lackluster demand prospects implied by milder weather associatedwith the calendar. Slipping 2.2 cents, the contract was last eyedat $2.131/MMBtu.

Followinga slow start to the injection season in the week to April 15, when the U.S.Energy Information Administration outlined a net that was well below historicalaverages, market participants are looking at what could be the firstdouble-digit addition to stocks of the season when the next inventory report isreleased at 10:30 a.m. ET on Thursday.

leading up to themidmorning release of the storage data that will cover the week to April 22call for a stock injection from 62 Bcf to 81 Bcf, with consensus formed at a70-Bcf build. This will compare against a 52-Bcf five-year-average build and an84-Bcf addition to stocks seen in the corresponding week in 2015.

Inventoriescurrently stand at 2,484 Bcf, or 881 Bcf above the year-ago level and 811 Bcfabove the five-year average of 1,673 Bcf, after the EIA reported the firststorage build of the titular injection season. An addition tostocks at this week's consensus figure would drive total working natural gas instorage to 2,554 Bcf, expanding the year-on-five-year-average overhang to 829Bcf but trimming the year-on-year surplus to 867 Bcf.

Theforthcoming storage report is expected to have been impacted by moderatingweather, as degree day data from the National Oceanic and AtmosphericAdministration for the week to April 23 show there were 36.8% fewer heatingdegree days compared to the same week last year and 46.9% fewer than average.

Weatherforecasts suggest a continuation of milder conditions in the coming weeks,which should keep demand limited and allow for natural gas production to flowmore heavily into underground storage facilities going forward.

Althoughthe latest weather outlooks show additional weeks of below-average temperaturesacross major heat-consuming regions, the calendar suggests higher lowtemperatures that should keep a lid on the amount of natural gas needed forspace heating. At the same time, pending hotter summer weather, demand forcooling is expected to remain limited. According to the NationalWeather Service, below-average temperatures will encompass the bulk of the Eastand portions of the central U.S. in the upcoming six- to 10-day period, asaverage temperatures linger over a patch of Maine, northern Florida, a sectionof the Midwest, fringes of the Gulf Coast and much of the Intermountain West.Above-average temperatures settle over a majority of the West, parts of thewest-north-central U.S. and southern Florida.

Below-averagetemperatures exit much of the country's northern tier but overtake more of thesouthern U.S. further out to the eight- to 14-day period to ultimately holdover the lower half of the Mid-Atlantic, nearly all of the Southeast, GulfCoast and much of the Intermountain West. Above-average temperatures remaindominant in the West and overtake the upper tier of the Midwest, as well as theupper section of the Northeast. Average temperatures span the remainder of theNortheast, balance of the Mid-Atlantic, the lower portion of the Midwest, anarrow band along the Southwest and the southern tip of Florida.

Incash trading, varied demand outlooks encouraged choppy price activity fornatural gas moved April 27.

Spotgas pricing at the major delivery locations were thoroughly jumbled at midweek.Transco Zone 6 NY day-ahead gas price action rose by about 19 cents to an indexat $1.586/MMBtu, as Chicago hub activity notched a near 1-cent gain on thesession in deals averaging at $1.928/MMBtu. PG&E Gate cash gas pricesfaltered by 3 cents on average to an index at $2.030/MMBtu, as benchmark HenryHub next-day gas pricing shed roughly 2 cents on the day to average at$1.880/MMBtu.

Regionalindexes were mixed but mostly higher. Northeast cash gas price activity climbedby around 4 cents in trading to average at $1.931/MMBtu, as Midwest day-aheadgas pricing increased by 1 cent to an index at $1.873/MMBtu. West Coastnext-day gas price action advanced by near 3 cents in transactions averaging at$1.661/MMBtu, as Gulf Coast spot gas prices floundered by around 1 cent onaverage against the dominant uptick to an index at $1.838/MMBtu.

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