Sign in to get the best natural gas news and data. Follow the topics you want and receive the daily emails.
Markets | LNG | Natural Gas Prices | NGI All News Access
Natural gas prices dropped again Wednesday as traders assessed receding domestic demand prospects, rising production and possible peril for American LNG exports. The October Nymex gas futures contract settled at $7.842/MMBtu, down 30.3 cents day/day. November fell 31.1 cents to $7.901.
Wednesday’s prompt month loss followed a 47.6-cent sell-off ahead of Labor Day Weekend and another 64.1-cent nosedive on Tuesday.
Cash prices followed suit. NGI’s Spot Gas National Avg. shed 37.0 cents to $7.925 on Wednesday after losing 31.0 cents the prior day.
NatGasWeather analysts attributed “strong selling” in large part to cooler temperature trends and robust production.
The firm said national demand was expected to ease late this week and into next week as weather systems usher in rain and lower temperatures across large swaths of the Lower 48, including Texas and the West.
U.S. production, meanwhile, hovered near 100 Bcf on Wednesday, according to Bloomberg’s estimate, putting output around an all-time high.
Additionally, as EBW Analytics Group analyst Eli Rubin pointed out, an Environmental Protection Agency (EPA) decision against waiving an emissions limit requirement for turbines at Cheniere Energy Inc.’s liquefied natural gas facilities further empowered bears.
The affected Cheniere operations at Sabine Pass and Corpus Christi currently account for more than half of U.S. LNG exports, “and any disruption could create chaos for U.S. and global natural gas markets,” Rubin said Wednesday.
At issue: The Biden administration’s EPA is reviving enforcement of the National Emission Standards for Hazardous Air Pollutants, which aims to limit carcinogenic emissions after an 18-year stay, Rubin noted. As part of this, the agency denied Cheniere’s bid for an exemption from the rule.
A Cheniere spokesperson said the change would not lead to any material impacts, given that the company can adjust gradually over time. This likely will happen over several years, Rubin said. “Alternatively, Cheniere may opt to pay noncompliance fines to ensure continued operations,” Rubin added. “Either solution is unlikely to disrupt near-term U.S. LNG exports.”
Still, any specter of LNG disruption is bound to spook natural gas traders, he said, given mounting global demand. Europe’s outsized LNG appetite, in particular, is expected to endure as the continent endeavors to transition away from Russian gas imports amid the Kremlin’s war in Ukraine.
Russia this month halted natural gas deliveries to Europe via its main pipeline to the continent – Nord Stream 1 (NS1). It blamed a purported oil leak at a compressor station, though European officials viewed the move as a retaliatory response to Western sanctions against Russia. Prior to the outage, NS1 deliveries were already curtailed but had been flowing around 1 Bcf/d.
Based on recent estimates of European Union (EU) inventories, serious supply adequacy issues could develop early next year – potentially in the heart of winter – according to Rystad Energy LLC analyst Wei Xiong.
“This risk will increase if Nord Stream 1 stays shut or runs at very low rates and if there is a cold winter or spring arrives late; in such a scenario, EU gas storage facilities could be significantly depleted by March or April 2023,” Xiong said. “At the same time, the EU could face rising competition for LNG from Asian buyers if winter in that region is also cold. This could exacerbate problems in securing supply.”
With domestic cooling demand easing and production up, analysts said the market will next focus on Thursday’s Energy Information Administration (EIA) storage report, sensitive to any fresh signs of supply/demand imbalance.
Major polls found analysts expecting a bullish result for the coming print relative to the five-year average. The EIA report, set for release at 10:30 a.m. ET Thursday, will cover the week ended Sept. 2
Results of Bloomberg’s survey showed a median injection projection of 56 Bcf, with estimates ranging from 47 Bcf to 66 Bcf. Reuters’ poll produced injection estimates that spanned 47 Bcf to 59 Bcf. It landed at a median of 54 Bcf. A Wall Street Journal tally found an average injection expectation of 56 Bcf, with a low estimate of 47 Bcf and a high of 66 Bcf.
In the comparable week last year, EIA printed an injection of 48 Bcf, while the five-year average injection is 65 Bcf.
EIA posted a 61 Bcf injection of gas into storage for the week ended Aug. 26, in line with expectations. The build raised working gas in storage to 2,640 Bcf. Still, stocks were 228 Bcf below year-earlier levels and 338 Bcf below the five-year average, EIA said.
Early estimates submitted to Reuters for the week ending Sept. 9 ranged from injections of 51 Bcf to 81 Bcf, with a mean increase of 64 Bcf.
Those projections compare with an actual injection of 78 Bcf during the comparable week in 2021 and a five-year average of 82 Bcf.
Spot gas prices receded across the country on Wednesday, as forecasts called for relatively mild conditions and easing cooling demand as September wears on.
NatGasWeather noted that strong upper high pressure continues to bring intense heat to the West – with triple-digit temperatures – and highs in the 90s across Texas and the Plains this week.
However, a hurricane could usher in a change in the West, while separate rainstorms are expected to bring cooler air to other parts of the country.
“California will cool late in the week as showers from Hurricane Kay off Baja arrive,” NatGasWeather said. “The South and East Texas will also cool late in the week as a stalled weather system brings showers and highs of 80s.”
The National Weather Service (NWS) said Hurricane Kay gathered more momentum in the Pacific on Wednesday, bashing Mexico’s Baja California Peninsula with heavy rains. NWS forecasters said the storm’s outer bands could bring heavy rains to Southern California and Arizona by the weekend.
Against that backdrop, SoCal Citygate fell 49.0 cents day/day to average $12.990 and PG&E Citygate dropped 84.0 cents to $9.090.
KRGT Del Pool in the Southwest slipped 88.0 cents lower to $12.475.
In Texas, El Paso Permian shed 63.5 cents to $6.725 and Waha lost 60.0 cents to $6.700.
Looking to next week, another round of weather systems “will track across the western and northern U.S. with showers,” and “comfortable highs of 60s to 80s,” NatGasWeather said.
“Recent model trends have generally been in the cooler direction,” the firm said Wednesday. “Upper high pressure is expected to strengthen to rule most of the U.S. for the 10-15-day forecast period, although this late in the season will produce mostly nice highs” with “only localized coverage of highs into the 90s for continued light national demand.”
© 2022 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |
Related topics: Cheniere Liquefied Natural Gas natural gas prices natural gas storage Nord Stream NYMEX Russia-Ukraine conflict
email kevin.dobbs@naturalgasintel.com
Daily Gas Price Index – Trending
NGI’s Daily NatGas Price Tracker
Listen to NGI’s ‘Hub and Flow’
Weekly natural gas cash prices gave up substantial ground amid rising production and near-term forecasts for mild temperatures across much of the Lower 48. NGI’s Weekly Spot Gas National Avg. for the Sept. 6-9 period dropped $1.010 to $7.865/MMBtu. Cash prices fell each of the holiday trading week’s four sessions. The period was abbreviated because…
Believing that transparent markets empower businesses, economies, and communities, Natural Gas Intelligence (NGI) provides natural gas price transparency and key news, insights and data for the North American energy markets.
1.800.427.5747 info@naturalgasintel.com Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile
© 2022 Natural Gas Intelligence. All rights reserved.
You have 3 free articles remaining. Get access to 100,000+ more news articles & industry data.
View Subscription Options Sign In