On Monday in the U.S. natural gas spot market, hotter temperatures supported Southeast gains, while price moves were mixed in the West; the NGI Spot Gas National Avg. added 6.0 cents to $2.125/MMBtu.

The June Nymex futures contract rallied 4.2 cents to settle at $2.673 after probing as high as $2.700. Further along the strip, July settled at $2.699, up 3.5 cents, while August gained 3.4 cents to $2.714.

NatGasWeather attributed Monday’s rally to a combination of demand gains in the latest forecasts and reports of a drop in production.

“Yet again, the weather data isn’t quite as bearish for the next seven days due to a mix of chilly conditions over the West and Plains, and hot conditions across the South and Southeast,” the forecaster said. “This has led to reductions in build size for the next several” weekly Energy Information Administration storage reports, indicating one or two upcoming injections could “come in barely under 100 Bcf.”

The market as of Monday appeared “satisfied demand was added through next weekend, but will still likely view the pattern around the start of June as not hot enough to impress.” However, “if demand again gets added” as days in the current Week 2 outlook period roll into the near term, “the markets are certain to notice,” according to NatGasWeather.

With hotter temperatures ahead, spot prices gained by double-digits at most locations in the Southeast Monday.

Elsewhere, amid generally cool and stormy conditions across the western third of the Lower 48, price adjustments were mixed in the Rockies and California to start the week. PG&E Citygate and SoCal Citygate both gained sharply day/day, though other locations in California eased. SoCal Border Avg. slid 15.0 cents to $1.350.

Four-day maintenance starting Tuesday could impact about 82 MMcf/d of southbound flows through the El Paso Natural Gas (EPNG) Dutch F compressor in western Arizona, according to Genscape analyst Matthew McDowell.

“The Dutch F serves as an interconnection between EPNG’s North and South Mainlines just upstream of the Arizona/California border,” McDowell said. “It has bidirectional capability but almost always flows north-to-south, usually at or near capacity.”

Operational capacity is expected to be reduced to 484 MMcf/d for much of the event, but at times could drop as low as 436 MMcf/d. “The past month has seen average flows at 566 MMcf/d, so these restrictions would represent cuts of 82 MMcf/d and 130 MMcf/d, respectively,” the analyst said. “A somewhat comparable reduction occurred during the shoulder season in mid-October 2017. Although that event did cut about 150 MMcf/d, there was no significant movement in SoCal Border basis.”

Further upstream, West Texas prices came under even more significant downward pressure Monday after several locations had already averaged in the negatives prior to the weekend. The downstream restriction on EPNG likely didn’t help matters for Permian Basin producers who have routinely found themselves squeezed by limited pipeline takeaway in attempting to market their associated gas output.

Waha dropped another 21.5 cents on the day to average negative 33.5 cents.

On Tuesday, Mexico’s president Andrés Manuel López Obrador was set to travel to the Ixachi field in Veracruz to announce plans for the gas-rich field.

Ixachi is one of 20 fields in southeastern Mexico for which Pemex is accelerating development, in order to start seeing incremental crude production by year-end, and is seen as a key part of reversing natural gas production declines in the country.

Ixachi’s proved, probable and possible (3P) hydrocarbon reserves are estimated at about 1 billion boe, and the field is expected to supply up to 80,000 b/d of condensate and 750 MMcf/d of gas production.

Ixachi has the strategic advantage of being located near existing wells and pipeline infrastructure, state oil company Petróleos Mexicanos (Pemex) has said, which will facilitate a rapid entrance into production.

López Obrador also reiterated on Tuesday that Pemex would receive additional tax breaks to help fund the company’s upstream-focused budget.