Spot natural gas prices strengthened in the final full week of May as power burns remained robust even as demand in the South Central region retreated along with temperatures. With a brief heat wave stoking East Coast demand – and another blast of cold hitting the West Coast – NGI’s Weekly Spot Gas National Avg. jumped 42.0 cents to $8.340.

The National Weather Service said several fronts were expected to impact the Pacific Northwest, Rockies and Northern Plains in the next few days. Thunderstorms and heavy rains were likely, along with snow in some areas.

The chilly weather sent cash prices higher for the May 23-27 trading period, with gains of more than $1.00 in California. SoCal Citygate traded in a wide band from $8.210-$10.300 before averaging $9.320, up $1.115 week/week. KRGT Del Pool was up 70.0 cents to $8.825.

Rockies prices climbed anywhere from 40.0 cents to 65.0 cents at the majority of locations, while West Texas points picked up mostly less than 50.0 cents on the week. Transwestern was up 44.0 cents to $8.005.

Over on the East Coast, rising temperatures were expected to bolster cooling loads. The mercury could reach the 90s, according to forecasts.

Weekly cash prices rallied on the warmer outlook, but price increases were not as stout as other U.S. hubs. Tenn Zone 5 200L climbed 20.5 cents on the week to average $8.130, while upstream, Columbia Gas tacked on 34.5 cents to $7.910.

Will Balances Improve From Here? 

Nymex futures, meanwhile, deteriorated this week as early-June forecasts pointed to milder temperatures and softer demand. Any more widespread heat likely would not arrive until the second half of the month, according to long-range weather models.

Importantly, any stalling of extreme heat may bode well for storage inventories, which have struggled to rebuild given earlier May heat and lagging production.

With the spring maintenance season winding down in the coming weeks, all eyes are likely to be fixated on production growth. After reaching levels near 97 Bcf/d this winter, output has languished in the low to mid-90 Bcf/d range ever since. Some of that was because of late-season cold that resulted in freeze-offs, while planned pipeline and field maintenance also cut into flows.

However, production on Friday was reportedly nearing 97 Bcf once again. Bespoke Weather Services said this may give the market a sense that it has seen the most bullish data it will see. Still, the overall picture remains supportive, according to the firm, “as data being ‘less bullish’ versus the last several days is not saying much, given where end-of-season storage levels are projected to be.”

Backdrop Still Tight

Indeed, the uphill climb to replenish storage inventories ahead of the winter remains steep. The Energy Information Administration (EIA) on Thursday said stocks as of May 20 were at only 1,812 Bcf, which is 387 Bcf below year-ago levels and 327 Bcf below the five-year average.

After multiple weeks of plump stock gains, the intense heat in the South Central region resulted in only 16 Bcf being added to inventories during the reference period. This left stocks about 13.5% below the five-year average, with hotter weather in the coming weeks expected to drive up demand.

Similar deficits were seen elsewhere throughout the country.

Wood Mackenzie senior analyst Eric Fell said the EIA’s reported 80 Bcf injection appears tight by 4 Bcf/d versus the prior five-year average compared to degree days and normal seasonality. In addition, it is “one of the tightest weekly storage reports this year,” Fell said. The other weekly report that was 4 Bcf/d tight was back in February.

Aside from summer heat, liquefied natural gas (LNG) exports also are likely to edge higher with the end of turnarounds this spring. After sitting below 12 Bcf on Tuesday, feed gas deliveries to U.S. LNG terminals had climbed to around 13.3 Bcf by Friday.

By the end of the year, LNG volumes may surpass 14 Bcf/d as Calcasieu Pass begins full operations. Many U.S. export facilities operate above their nameplate capacity during times of strong demand. With heat building in Asia, and Europe continuing to replenish stocks in the wake of Russia’s invasion of Ukraine, the call on U.S. LNG is expected to be robust throughout the remainder of the year.

The rapid ramp-up at Calcasieu Pass, which hit a demand record above 1.2 Bcf/d on Thursday, continues to lift total LNG export capacity, according to EBW Analytics Group. “If momentum is sustained, many analysts’ LNG demand projections may be subject to bullish revisions this summer.”

Red, White & Blue Sale

The natural gas market put on a Memorial Day sale Friday for spot gas deliveries Saturday through Tuesday, with prices off more than $1.00 at several market hubs across the country. With low demand, thanks to relatively moderate temperatures as well as the holiday weekend, California saw some of the biggest losses.

SoCal Citygate cash was down $1.105 day/day to average $8.565 for gas delivery through Tuesday. Over in the Southwest, El Paso S. Mainline/N. Baja dropped $1.245 to $8.220.

Similarly steep discounts were seen upstream in the Permian Basin. Waha cash was down $1.140 to $7.410.

Prices across the Rockies also plummeted as a series of cold fronts advanced inland off the Pacific Ocean through the weekend. The National Weather Service said much colder temperatures and unsettled weather were in store for most of the Intermountain West. The Pacific Northwest and the northern Rockies also were likely to see plenty of shower activity and some locally heavy rainfall.

“Sufficient cold air is expected to arrive by Saturday night and Sunday for there to be some locally heavy snowfall for portions of the northern Rockies,” said NWS. Some areas could see up to two feet of snowfall to round out the weekend.

“Some beneficial rains will also begin to spread out across portions of the northern High Plains as a series of low pressure centers eject east out of the Rockies,” NWS forecasters said.

Despite the chill, cash prices moved sharply lower ahead of the weekend. Northwest Wyoming Pool was down 92.0 cents day/day to average $7.715 for the three-day gas delivery.

Other U.S. locations followed the same trend, with double-digit declines occurring as any meaningful summer heat was relegated to the southern states. In fact, after reaching the 90s earlier in the week, the East Coast was gearing up for the arrival of a cold front this weekend.

Eastern Gas South spot gas tumbled 51.5 cents day/day to average $7.460, while Transco Zone 6 NY fell 44.5 cents to $7.710.