With only a few months of injections left, steep natural gas storage deficits remain in key regions, but with production setting records and trending higher, prices haven’t responded.
Articles from Bidweek
Bidweek came at an opportune time for market bulls as weather forecasts showing warmer-than-normal weather across much of the country for the first half of the month lifted July bidweek prices, with especially stout increases seen in southern California, the Pacific Northwest and the Northeast.
As the saying goes, April heating demand brings May cooling demand, or something to that effect.
With an unusually cold April fading into memory and minimal weather catalysts expected over the month ahead, May natural gas bidweek traders were left to ponder the impact of a belated start to the injection season on a well-supplied market.
A hefty storage deficit combined with near-record production had April natural gas bidweek traders taking stock of the market’s supply and demand balance on the cusp of injection season; the NGI National Bidweek Average shaved off 7 cents month/month to $2.36/MMBtu.
Forecasts for more Arctic chills during the month of February never panned out, and March bidweek traders responded by shifting into shoulder season mode a little early, recording significant natural gas price cuts across the board.
Bidweek traders had plenty to mull as they locked in their February prices. On the one hand, a hefty close to the February futures contract appeared decidedly bullish on the arrival of strong heating demand to close out the winter. On the other, a whiplash reversal in the March contract suggested a market already discounting hefty January storage withdrawals, thanks to record-setting production numbers.
Winter’s arctic freeze along the East Coast and the Midwest was enough to overcome lingering December weakness in the rest of the country, promoting NGI’s January Bidweek National Average price by 24 cents to $3.36/MMBtu.
Winter has arrived for the natural gas markets, as evidenced by the broad gains in NGI’s December Bidweek Survey, where the National Average jumped 59 cents month/month to $3.12/MMBtu, which is also a mere 8 cents below December 2016’s $3.20/MMBtu.
Natural gas bidweek trading for November was a study in contrasts, with double-digit losses in the nation’s midsection balanced by hefty gains in Appalachia, the Northeast, Rockies and California.