Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you a link to reset your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you a link to reset password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Natural Gas

ANALYSIS: High storage, recovering production, lower demand weigh on Midwest natural gas price outlook

Natural Gas | Natural Gas (North American)

US Northeast gas storage faces questions following volatile injection season

LNG | Natural Gas | NGL

Platts LNG Alert

Capital Markets | Commodities | Energy | Electric Power | Electric Power Risk | Natural Gas | Banking | Infrastructure | Structured Finance

Global Power Markets Conference, 35th Annual

Natural Gas | Natural Gas (North American)

Tightening gas-market fundamentals lift Henry Hub 2021 forwards to 4-year high

ANALYSIS: High storage, recovering production, lower demand weigh on Midwest natural gas price outlook

Highlights

Bakken hits record-low flaring volume

Chicago basis hits near three-year low

New York — US Upper Midwest natural gas prices are standing on shaky ground as volumes cross the five-year maximum threshold and Bakken production continues to outperform expectations as operators tamp down flaring.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Strong storage inventories, warmer than normal temperatures and an active hurricane season has sent Chicago basis versus Henry Hub to a month-to-date average of approximately minus 45 cents/MMBtu. It struck a daily low of minus $1.03/MMBtu on Oct. 12, the weakest it's been since January 2018. This is likely to continue for the coming weeks until production falls once again amid rising winter demand, according to S&P Global Platts Analytics.

Midwest working gas storage volumes surpassed the five-year maximum in mid-August and have remained just above that level, according to data by the US Energy Information Administration. Stocks stand at 1.081 Tcf and will likely surpass the all-time high of 1.154 Tcf.

While storage inventories have trended well above normal since the beginning of the summer, recently returning production has also increased supply. Production in the Upper Midwest fell to 1.7 Bcf/d in May with flows on Northern Border Pipeline from the Bakken Shale in North Dakota to Chicago decreasing to 1.1 Bcf/d from 1.9 Bcf/d in March, according to Platts Analytics.

The Bakken has seen month-over-month production gains since then, with October averaging 2.2 Bcf/d, tied with March for the highest month in 2020. Platts Analytics had forecast Bakken production would begin falling this month, to 1.9 Bcf/d from September's 2 Bcf/d .

Data from the North Dakota Industrial Commission has Bakken production bouncing back even stronger, averaging 2.6 Bcf/d in August, the latest state data available. It's a remarkable turnaround from the 1.9 Bcf/d reported for May, right after operators began shutting in wells due to the crude price collapse and demand destruction related to the coronavirus pandemic.

What's more, operators in the shale play are utilizing new gathering and processing capacity, lowering the amount of associated gas flared from 12% in May to 8% in August. The 8% flaring rate is the lowest percentage ever reported from the NDIC, whose data stretches back to 2012.

This growing supply from returning production in the region and surrounding regions further weakened Chicago prices as the summer progressed.

Exacerbating this filling storage and returning supply has been lower demand than normal. Chicago is expected to finish October 2 degrees above normal, with the entire Upper Midwest region averaging 1 to 4.9 degrees above normal according to the Weather Desk. So far this month, total demand in the region has averaged 9.9 Bcf/d, 1.4 Bcf/d below this time in October 2019.

The region typically sends excess gas to the Southeast, but that demand too has been limited. Net outflows this month have dipped to 1.2 Bcf/d so far this month, down from August and September's 1.5 and 1.4 Bcf/d, respectively. While normal maintenances have contributed to reducing flows, Hurricane Delta dropped net outflows Oct. 9, the day the storm made landfall in Louisiana, to 888 MMcf/d with the next two days averaging 1.2 Bcf/d. This lower demand and supply route loss has increased gas in the region and exacerbated the strong storage inventory's weight on Chicago.

Platts Analytics does not expect this to persist long. Hurricane season typically ends in late November while cooler temperatures will raise residential and commercial demand and draw on storage inventories once again even as gas-fired power demand wanes.

Financing US Power Conference | October 28, 2020

This event delivers information and insight on deal-making in the US power sector. Network, exchange ideas, find the next best deals, discover who's looking to secure capital, who has the money to lend, and more.

Learn more