Picture-perfect weather across the country sank spot gas prices for the April 5-9 week, with markets on the East Coast leading the way with the steepest losses in the Lower 48. NGI’s Weekly Spot Gas National Avg. ultimately fell 15.0 cents week/week to average $2.250.
Nymex futures were far less volatile, aside from the start of the week, when the May contract sunk to a year-to-date low after a major warm revision in the April forecast.
Driven by mild temperatures in the 50s to 70s across the northern United States, Northeast markets posted substantial decreases week/week. The result was sub-$2.000 pricing even in some of the highest-priced markets.
Weekly prices across the Southeast and Louisiana fell by less than 20 cents across the region, and similar losses extended into the Midwest and Midcontinent.
Texas fared a bit better, thanks to some early-season cooling demand as temperatures neared 90 degrees. Katy dropped 4.0 cents week/week to average $2.395.
A Snail’s Pace
The mild spring weather brought Nymex futures to a near standstill for much of the April 5-9 week.
After a sharp plunge on Monday amid the warmer April outlook, the May Nymex futures contract settled into a seemingly comfortable range in the low to mid-$2.500s. The prompt month ultimately closed out the week at $2.526, up 1.6 cents from Monday’s close.
After “a very slow day” on Friday, Bespoke Weather Services said it remained neutral in its near-term sentiment. However, longer term, the firm is starting to see risk increasing for a move higher.
“Basically, supply/demand balances have improved enough for us to shift away from the ‘sell all rallies’ mindset, to one of complete neutrality, open to either a modest move higher or lower,” Bespoke said. “But given how ironclad the $2.50 support level has been, there does not appear to be as much downside risk, since this level kept holding even when balances were worse.”
At the same time, the firm said it would like to see a little more strength in the data before saying the runway is “clear for takeoff higher” in the land of prices. While that could occur in the week ahead, “we feel better, for now, saying the chances will improve as we move closer to the hot season, where we do expect above-normal heat for the nation as a whole once again.”
No doubt, the market will likely look to the next government storage report for more decisive price direction.
This week, the Energy Information Administration (EIA) said that inventories rose by another 20 Bcf. It was the second build of the injection season, which got off to an early start with the prior week’s 14 Bcf build.
The 20 Bcf figure was in line with market expectations, which was a surprise considering the agency’s figures had sharply deviated from projections ever since February’s deep freeze.
Broken down by region, the South Central reported a 19 Bcf injection into storage, which included 10 Bcf into nonsalt facilities and 9 Bcf into salts, according to EIA. Pacific stocks rose by 4 Bcf, while Mountain stocks added 3 Bcf.
The East reported a withdrawal of 2 Bcf, with the Midwest at a 3 Bcf pull, EIA said.
Total working gas in storage as of April 2 stood at 1,784 Bcf, which is 235 Bcf below-year ago levels and 24 Bcf below the five-year average, according to the agency.
Meanwhile, liquefied natural gas (LNG) demand remains strong. Though all three trains at the Cameron LNG terminal underwent maintenance this week, total feed gas deliveries dropped only temporarily and were climbing back by the end of the week. NGI data showed feed gas volumes nearing 11 Bcf on Friday, after tumbling to around 10 Bcf on Thursday.
Exports to Mexico also rebounded this week following the Holy Week otherwise known as Semana Santa, which begins on Palm Sunday and ends Easter Sunday.
Wood Mackenzie said the strongest impact is typically felt between Maundy Thursday and Easter Sunday, which this year occurred from April 1 to 4. According to its Daily Supply & Demand estimates, Mexican exports fell from an average of 6.2 Bcf/d during the last week of March down to an average of 5.6 Bcf/d during the first week of April.
Exports reached a low during that time of 5.0 Bcf/d, on April 3. “Mexports have been closer to 6.5 through the end of this week, April 6 through April 9,” said Wood Mackenzie analyst Nicole McMurrer.
In The Red
The losses continued to come for spot gas markets on the East Coast, where very light demand was expected for another few days before a cold front begins descending into the central United States by the middle of the week.
Until then, high temperatures in the upper 50s to lower 70s were forecast over most of the northern and interior United States, according to NatGasWeather. The southern and eastern part of the country were in store for daytime highs in the 70s and 80s. The only region that was expected to see hotter weather, with highs in the 90s, was the Desert Southwest.
Given the mild conditions, and the typical drop in demand that accompanies the weekend, East Coast prices continued to fall by the double digits.
The losses occurred despite some planned maintenance taking place in Appalachia in the coming days.
Columbia Gas Transmission (TCO) is performing planned pigging on Line LEX, spanning from West Virginia into Ohio, with impactful restrictions put in place for gas days Tuesday through Thursday. The work would limit up to 272 MMcf/d of receipts and 873 MMcf/d of westbound flow, according to Wood Mackenzie.
Eureka and Stagecoach – LXP are both gathering systems located in Ohio that bring gas onto the pipe, the firm noted. Lone Oak A MA41 and Lone Oak B MA41 are both throughput meters located in West Virginia that move gas westerly along TCO’s system. LXPSEG MA41 also is a throughput meter located in Ohio that moves gas westerly.
Wood Mackenzie analyst Anthony Ferrara said that cuts of up to 272 MMcf/d (receipts) and 873 MMcf/d (westbound flow) should be expected on Tuesday. On Wednesday and Thursday, cuts of up to 582 MMcf/d and 427 MMcf/d (westbound flow), respectively, are expected.
Ferrara noted that TCO indicated “the impacted capacities will not be reinstated until the work is complete, which may affect Timely Cycle nominations for gas days between pig runs.”
Elsewhere across the country, prices were mostly higher.
Texas pricing locations mostly churned out small gains as well, and farther West, prices were mixed but shifted less than a nickel day/day at the majority of market hubs. SoCal Citygate was a glaring exception, with spot gas prices rocketing up 25.0 cents to 3.185.
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