North American natural gas futures prices were in a downward spiral this week and fell for the fifth time in six sessions on Thursday. Both the July and August New York Mercantile Exchange futures contracts had fallen below the $3.00/MMBtu level.
The market now turns to the U.S. Energy Information Administration’s storage report, which this week is scheduled for Friday.
Tropical Storm Alberto, the first named storm of the Atlantic storm season, made landfall on Thursday near Tampico, Mexico, according to the National Hurricane Center (NHC). Mexico’s Nuevo León Gov. Samuel García said Wednesday night that three children had died because of heavy rains.
The storm was downgraded to a tropical depression as it moved inland through Mexico.
Marketers in Mexico said that natural gas deliveries from Texas, which also saw heavy rain and flooding, had not been impacted.
“Infrastructure has not seen any impact,” Mexico independent consultant Santiago Villareal told NGI’s Mexico GPI. “The flow to Mexico has been as usual, but the rainfall could impact hydro levels, which have been very low and this would put more hydro online and natural gas demand could decrease in the coming weeks.”
In the short term, demand for cooling on both sides of the border could also be sapped by Alberto and other storms developing.
NHC said a disturbance in the southwestern Gulf of Mexico had a 20% chance of further development through the weekend. The system was expected to move slowly to the west-northwest or only northwest. NHC also was tracking an area of low pressure about 150 miles east of the northernmost Bahamas. The system had a 40% chance of further development early Thursday, NHC said.
“Again, we expect a very active tropical season this year,” NatGasWeather analysts said Thursday.
Mexico Imports
Amid sweltering heat, Mexico imported 7.41 Bcf/d via pipeline over the past 10 days through Thursday. That was a decrease of 0.20 Bcf/d over the previous 10-day period, according to NGI calculations.
“June is still ahead of May for the highest recorded monthly average of U.S. natural gas pipeline imports,” said NGI markets analyst Josiah Clinedinst.
A drop in South Texas exports to Mexico can be largely attributed to the lack of flows reported on the Nueva Era pipeline. It had not posted figures since June 12 on the electronic bulletin board, according to Clinedinst.
“While this may at first look like it has something to do with tropical storm Alberto, this cut-off of information precedes the tropical storm's landfall date,” he said. “Besides the Nueva Era pipeline issue, all other South Texas pipelines recorded similar flows compared to the previous days in June.
“Once Nueva begins reporting flows again, we will likely see similar U.S. natural gas pipeline exports to Mexico return to early-mid June levels.”
According to Wood Mackenzie, Mexico pipeline imports over the last 30 days were up by 500 MMcf/d year/year at 7.2 Bcf/d.
New Cabinet
Mexican President-elect Claudia Sheinbaum on Thursday named the first members of her incoming cabinet.
Sheinbaum named a former competitor for the Morena party presidency, Foreign Minister Marcelo Ebrard, to run the economy ministry. Diplomat Juan Ramon de la Fuente is to take over as foreign minister, while Alicia Barcena would become environment minister. Rosaura Ruiz will head a new science and technology ministry.
There was no news on the energy minister but Sheinbaum said she would name more cabinet members next week. Speculation is that Lázaro Cárdenas Batel, the grandson of former President Lázaro Cárdenas who nationalized the Mexican oil business in 1939, could be the new energy minister.
Sheinbaum assumes the presidency at the start of October.
Mexico Prices
In Mexico on Wednesday, natural gas cash prices at Los Ramones fell by 8.1 cents day/day to $2.548, according to NGI data. Monterrey via the Mier-Monterrey system was down 8.1 cents to $2.361. Tuxpan in Veracruz via Cenagas saw the spot price fall 7.7 cents to $3.023.
Out West, the Guadalajara natural gas price fell 11.6 cents to $2.556 cents on Wednesday. Farther north in El Encino, prices via Tarahumara were $1.316, 15.8 cents lower than the previous day.
On the Yucatán Peninsula, the cash price at Mérida was $3.903 on Wednesday, down 7.3 cents.
