Forward Look

Despite a full roster of planned and already constructed pipeline projects aimed at uncorking the glut of supply from the Appalachian Basin, the average basis of U.S. forward market locations covered byNGI’s Forward Look for the remainder of 2015 came in at negative 3.3 cents during trading on Aug. 19. Said differently, the average price of natural gas across the United States is expected today to be 3.3 cents less than the Henry Hub over the course of September, October, November and December 2015, and the gap is expected to get much wider before narrowing.

Natural gas forward points tracked by NGI took their cue over the last week from the rising screen as heat in population centers across the country teamed to put upward pressure on prices.

Broadly, September basis prices around the country during the first week of August were flatter than a pre-Columbus map of the world. Changes in regional market dynamics just couldn’t supply enough steam to get basis prices to shift.

Natural gas forwards markets for September trading were mostly quiet since last week, showing only small changes of less than one cent on average. As with every rule, however, there are some exceptions.

The summer topic du jour in U.S. natural gas markets seems to be the long-awaited opening up of Marcellus Shale gas to major market centers around the country, with a big jolt coming from the opening of the large Rockies Express Pipeline to East-to-West volumes expected Aug. 1.

Possibly on expectations of warmer weather, Transco Zone 6 NY’s August natural gas basis pricing has been on the rise, moving up 29 cents from minus $1.161 to minus $0.870 since the August contract became prompt. However, erasing the deficit to the Henry Hub completely is not likely to happen till late fall, according to NGI’s analysis of forward prices.

With a flood of Marcellus natural gas lining up at the exit there's a good chance Midwest pricing may get trampled as the gas races to previously inaccessible markets. Tallgrass Energy Partners LP’s REX Zone 3 promises to be the new way out with the anticipated Aug. 1 beginning of East-to-West flows on the pipeline, which has major interconnects with Midwest-serving pipelines such as ANR, PEPL, and NGPL.

With a flood of Marcellus natural gas lining up at the exit there’s a good chance Midwest pricing may get trampled as the gas races to previously inaccessible markets. Tallgrass Energy Partners LP’s REX Zone 3 promises to be the new way out with the anticipated Aug. 1 beginning of East-to-West flows on the pipeline, which has major interconnects with Midwest-serving pipelines such as ANR, PEPL, and NGPL.

Only a few natural gas forwards markets showed any signs of life during the short Independence Day holiday week, with the majority of price points swinging just a few cents in either direction.