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June natural gas futures near unchanged ahead of week’s opener

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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 near unchanged ahead of week’s opener

Followinga finish up 2.5 cents in pre-weekend book squaring to a settle at $2.101/MMBtu,June natural gas futures were meandering on either side of unchanged withlittle direction provided by fundamentals. The contract moved as high as$2.108/MMBtu and traded as low as $2.088/MMBtu and was last eyed 0.4 cent lowerat $2.097/MMBtu ahead of the Monday, May 9, open.

Weatherremains the primary catalyst for market movement and forecasts offered no substantialsupport for sharp gains or losses amid expectations for below-averagetemperatures across the majority of the Northeast, the mid-Atlantic, portionsof the Southeast, a large portion of the central U.S. and a portion of theNorthwest in the six- to 10-day period. Average temperatures are forecast for aportion of Maine, a swath that crosses from the Southeast into the southcentral and up into a portion of the Northwest, as well as an area of theSouthwest, while portions of the Southeast, Gulf, central and West will seeabove-average temperatures.

Inthe eight- to 14-day period below-average temperatures are forecast for a largeportion of the Northeast, a small portion of the mid-Atlantic, a small area ofthe north-central U.S. and a portion of the central U.S. into the Rockies andSouthwest. An area of above-average temperatures in the Northwest spreads downinto the coastal areas of California, while above-average temperatures willgrip the majority of the Southeast, the entire Gulf Coast and portions of thesouth-central U.S. The remainder of the country will see average temperaturesthrough the period.

Themix of weather and the mark of the calendar should work to keep temperaturesrelatively mild and limit the amount of natural gas needed for either coolingor heating, leaving natural gas available to move into underground storagefacilities adding on to an already healthy supply.

U.S.Energy Information Administration storage data outlined a build of 68 Bcf forthe week to April 29, that was below the 77-Bcf injection reported for the sameweek in 2015, but was better than the five-year average injection of 64 Bcf andbrought total U.S. working gas supply to 2,625 Bcf, some 861 Bcf above theyear-ago level and 836 Bcf above the five-year average storage level of 1,789Bcf.

Naturalgas inventories are currently on the rise, but the pace of storage injectionsis below that of the previous year. The EIA said cumulative net injections intoworking gas total 145 Bcf thus far in the 2016 refill season, compared with thefive-year average of 183 Bcf and last year's tally of 292 Bcf during the sameperiod. Stocks still remain near record highs for this time of year, and thatlevel of supply remains a weight on natural gas values.

Pressuredahead of the weekend by weather and the weekend-day inclusion in the Fridayproduct offering, cash gas markets were lower across the hubs and across theregions.

Atthe hubs, the Northeast’s Transco Zone 6 NY hub led the retreat with a sharp37.1-cent loss to an index at $1.455/MMBtu, followed by the Henry Hub, whichwas 18.7 cents lower to an index at $1.863/MMBtu. PG&E Citygate traded down14.6 cents to an average at $1.963 and Chicago, which was 14.4 cents lower,found an index at $1.868/MMBtu.

Regionally,the West gave back 20.7 cents to an index at $1.608/MMBtu, leading over theNortheast, down 20.4 cents to an index at $1.779/MMBtu. The Gulf Coast waslower by 14.4 cents to an index at $1.730/MMBtu, while the Midcontinent waslower by 12.8 cents to an index at $1.868/MMBtu.

Market prices andincluded industry data are current as of the time of publication and aresubject to change. For more detailed 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 Storagedata, go to our Natural GasStorage Page.