Forward Look

As early-season heat that boosted demand over the Memorial Day holiday week dissipated during the first week of June, natural gas forward prices plunged as weather outlooks showed far milder temperatures for most of the remainder of the month, according to NGI’s Forward Look.

An early-season heat wave and fluctuating production helped lift forward prices at the majority of pricing hubs across the country during the May 23-29 period, with gains up to 10 cents most common. However, increasing supply in the Permian Basin combined with pipeline maintenance to drive regional prices back into negative territory after plunging as much as 35 cents, according to NGI’s Forward Look.

After a breather last week, natural gas forwards made a splash during the May 16-22 period as a sizeable chunk of production returned to the market and sent prices along the curve down by double-digits, according to NGI’s Forward Look.

A week of storms that left demand rather limited across the country did little to spark volatility in natural gas forward markets. Prices throughout the curve swung only a few pennies in either direction at the majority of market hubs as temperatures remained rather mild for yet another week, according to NGI’s Forward Look.

With Lower 48 natural gas production well off recent highs, forward prices continued to strengthen May 2-8 despite the absence of any early-summer heat to drive demand. Gains were small, however, as temporary pipeline maintenance was to blame for a significant chunk of the supply cuts.

Natural gas forward prices continued to ride the momentum of gains experienced late last week as a burst of stronger-than-normal demand lingered long enough to continue supporting the market during the April 25 to May 1 period. June prices rose an average of 6 cents during that time, while the balance of the summer (June-October) edged up a nickel, according to NGI’s Forward Look.

Despite prospects for brief upswings in natural gas demand, an overwhelming bearish sentiment continued to weigh on forward prices this week as recent mild spring temperatures throughout much of the country were seen lasting at least through the early part of May. May prices fell an average 7 cents from April 17-24, while June and the balance of summer strip (May-October) each lost an average 8 cents, according to NGI’s Forward Look.

A solidly bearish weather outlook sent natural gas forward prices tumbling from April 11-16 as the mild spring setup was expected to significantly improve storage inventories in the weeks ahead, potentially leading to a year/year surplus in stocks. May forward prices dropped an average 11 cents, while June and the balance of summer (May-October) slid a dime on average, according to NGI’s Forward Look.

After weeks of softening for natural gas forwards, prices bounced back during the April 4-10 period as production remains down from earlier post-winter highs. May prices rose an average of 4 cents, while June rose a nickel, according to NGI’s Forward Look.