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October gas continues to unwind ahead of final day in lead slot

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

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


October gas continues to unwind ahead of final day in lead slot

Afternotching a marginal 0.1-cent loss Tuesday to a settle at $2.996/MMBtu, October naturalgas futures retained a downside bias overnight ahead of the Wednesday, Sept. 28,open and the contract's roll off the board at the close of business, as still-robustinventories and the calendar implications on weather pressured values.The contract was last seen 6.5 cents lower at $2.931/MMBtu.

Althoughthe succession of smaller-than-average storage builds throughout much of the injectionseason to date have steadily eroded storage overhangs against historical norms,overall inventories remain elevated and on the path to reaching an all-time highend-of-season level estimated at 4,042 Bcf, according to the U.S. Energy InformationAdministration.

Totalworking natural gas in storage currently sits at 3,551 Bcf, or 140 Bcf above theyear-ago level and 268 Bcf above the five-year average of 3,283 Bcf, after the EIAoutlined a 52-Bcf additionto stocks for the week to Sept. 16 that bested consensus estimates but was wellbelow both the 83-Bcf five-year-average build and the 96-Bcf injection seen in thecorresponding week in 2015.

For thenext weekly inventory report due out Thursday that will cover the week to Sept.23, traders and analysts anticipate another lackluster storage injection in thelow to mid-50s Bcf, which would compare against the 99-Bcf year-ago addition tostocks and the 97-Bcf five-year-average build. A storage build withinthe range of estimates would further trim storage surpluses, but nevertheless keepinventories elevated relative to historical averages.

Movingforward, moderate weather conditions associated with the fall shoulder season suggestlimited demand for either cooling or heating, despite extremes in temperature reflectedin the latest midrange weather maps. Revised National Weather Service forecastsfor the six- to 10-day and eight- to 14-day periods show the country split betweenabove-average temperatures over the entire East into the bulk of the central U.S.and below-average temperatures over the West, as a narrow band of average temperaturesspan the west-central U.S. to separate the two extremes.

Lowerhigh temperatures and higher low temperatures implied by the calendar should keepa lid on calls on natural gas for either late cooling or early heating.

Longerterm, the latest seasonal outlookfrom The Weather Company calls for warmer-than-normal weather for much of the countryfrom October-December, while its official winter outlook for December-February 2017calls for above-average temperatures in all locations except parts of the Northeast,where an early colder winter is likely.

In cashactivity, the price of natural gas booked for Wednesday flow was weaker in muchof the country amid anticipation for diminished demand.

Acrossthe key hubs, the charge lower was led by Transco Zone 6 NY spot gas price actionthat shed almost 10 cents on the session to average at $1.002/MMBtu. PG&E Gatenext-day gas pricing followed with an almost 9-cent decline to an index at $3.460/MMBtu,then benchmark Henry Hub cash gas prices that slid by 2 cents on average to an indexat $3.068/MMBtu and Chicago hub activity that notched a near 1-cent reduction indeals averaging at $2.953/MMBtu.

On aregional basis, Northeast day-ahead gas prices faltered by about 1 cent on averageto an index at $1.649/MMBtu, as West Coast cash gas price action deflated by around7 cents on the session to average at $2.780/MMBtu. Gulf Coast spot gas price activityunraveled roughly 3 cents in transactions averaging at $2.898/MMBtu, as Midwestnext-day gas pricing recoiled by 2 cents to an index at $2.877/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 andnatural gas indexprices, as well as forwards and futures, visitour Commodities Pages.