Natural Gas Forward Basis Ends April With A Whimper
Natural gas forwards markets remained painfully quiet during the last week of April as only a handful of Northeast points shifted more than a few cents.
The most significant movement occurred at Dominion South, where June basis fell some 9.5 cents between Monday and Thursday to reach minus $1.112/MMBtu, according to NGI’s Forward Look.
Farther out the curve, Dominion South July dropped 10 cents to minus $1.035/MMBtu, and the balance of summer (July-October) slid 7.5 cents to minus $1.179/MMBtu.
Texas Eastern M3 posted similar declines across its curve, with the weakness in basis helping attract supplies for power plants that have recently gone into service in the region.
At the Algonquin Gas Transmission city-gates, June basis fell 8.7 cents to plus 10.6 cents/MMBtu, while July plunged 21.3 cents to plus 32.1 cents/MMBtu. The balance of summer was down 10.1 cents to plus 4.9 cents/MMBtu.
The weakness at Dominion and Algonquin, and across most of the Northeast in general, comes amid conflicting weather outlooks for the region this summer.
Earlier this week, forecasters at AccuWeather.com said the Northeast could expect more 90-degree-plus days this summer compared with last summer, which was cooler than normal.
The weather agency said areas like population-dense Philadelphia and New York City could have as many as 10 more 90-degree-plus days this summer versus the summer of 2014.
But forecasters at Weather Services International said the Northeast should average cooler than normal through July as the 2015 El Nino event continues to strengthen.
In the near term, it appears mild weather will continue to dominate over much of the country through at least mid-May.
There will be slight cooling over the far northern U.S. late next week as a weather system tracks through southern Canada, but it will fail to push far enough into the U.S. to meaningfully provide demand for heating,” according to forecasters with NatGasWeather.
The weather agency said there is potential for a few cooler weather systems to track through the northern U.S. around mid-May, but they are far from cold enough to prevent coming builds to storage inventories from being larger than normal, thereby allowing deficits to switch to surpluses before the end of the month.
The U.S. Energy Information Administration on Thursday reported an 81 Bcf build to storage, raising working gas in storage to 1,710 Bcf as of April 24. Stocks are currently 741 Bcf higher than year-ago levels and 75 Bcf below the 5-year average of 1,785 Bcf.
Despite the overall bearish weather sentiment for the Northeast, not every market hub in the region took a turn to the downside.
Transco zone 6-New York June basis managed to pick up 2 cents to reach minus 18.7 cents/MMBtu, while July rose 1.4 cents. The balance of summer edged up 3.4 cents to minus 40.9 cents/MMBtu.
The strength in New York prices can be attributed to maintenance on Transco’s Leidy Line, which began Friday and is expected to continue for some 43 days, restricting 0.3 Bcf/d of interruptible flows through Station 505 each day and possibly limiting up to 0.54 Bcf/d of firm transport on select days.
The maintenance, which is part of Transco’s Leidy Southeast Expansion project, will be looping a segment of its pipeline between Station 505 and Princeton Junction (Station 210 Pool).
Over in the western U.S., California points gained no more than a few cents on the week, while Washington slid as much despite indications the ongoing drought in California will worsen and expand to its northerly neighbors.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 | ISSN © 1532-1266 |