After sinking as low as $2.635/MMBtu early Monday, prompt month natural gas futures were trading higher through midday, with widespread heat providing support.
Here’s the latest:
- July Nymex natural gas futures were up 7.5 cents to $2.780 at around 2:20 p.m. ET; August futures were up 7.5 cents to $2.911
- Forecasts erased 14 cooling degree days; outlook still exceedingly warm
- Production remained below record highs
Gelber & Associates analysts said U.S. natural gas production hit 101.2 Bcf/d over the weekend, “an output not seen in about a month’s time.” Gains were pared on Monday by 0.4 Bcf/d to 100.8 Bcf/d, analysts said.
While natural gas production has “shown some signs of life recently, output remains well below record highs,” Pinebrook Energy Advisors’ Andy Huenefeld, managing partner, told NGI. Lower 48 production reached highs around 107 Bcf/d earlier this year.
“The signal from the supply side is bearish for now,” Huenefeld said. However, analysts are anticipating producers ramp output to meet rising cooling demand as extreme heat is forecast to blanket most of the country well into July.
Cooler changes have been seen since Friday with increased variability in the forecast, Maxar’s Weather Desk meteorologist Steve Harvey said. “That said, this is still a generally hot pattern as we head through the end of June and into the start of July.”
Harvey said the heat would be steadiest in the coming days across the southern tier. Some occasional heat in the Midwest and East may be interspersed with normal to below-normal temperatures at times.
Huenefeld said warmer-than-normal anomalies could provide support.
According to Wood Mackenzie data, though, combined Lower 48 natural gas demand was 83.3 Bcf/d on Monday, down from 84.9 Bcf/d on Friday.
Contributing to the decline, LNG demand faltered from recent highs around 13.5 Bcf/d, Huenefeld noted. “When it gets really hot, terminals are not as efficient; they can’t liquefy as much gas.”
Flows to liquefied natural gas facilities were at 12.8 million Dth Monday, according to estimates from NGI’s U.S. LNG Export Flower Tracker.
On the online energy platform Enelyst, Criterion Research’s James Bevan, vice president of Research, said flows were up from 11.8 Bcf/d on Friday because the Calcasieu Pass LNG export terminal “bounced back from a one-day event.”
“The Friday drop at Calcasieu Pass saw gas pushed back,” both on ANR Pipeline Co. and Texas Eastern Transmission Co. However, “flows were back to a normal range from Saturday onwards,” Bevan said.
In other pipeline news, Mountain Valley Pipeline LLC continued to ramp up flows, with the weekend seeing flows slightly over 0.5 Bcf/d, Gelber analysts said. Most was sent to Transcontinental Gas Pipe Line Co. LLC (Transco).
- Texas cash prices tumble, Waha sinks $1.285 to negative $1.030
- Pipeline maintenance limits flows
Pipeline maintenance expected to limit natural gas flows weighed on Texas spot gas prices.
Transco scheduled maintenance from Tuesday through Thursday. The maintenance is set to cause outages at Station 54 and the associated Washington storage facility in Louisiana.
According to the electronic bulletin board notice, a potential maximum cut of up to 169 MMcf/d could be curtailed if all injection services were on pause during the maintenance. Withdrawal services were not expected to be impacted.
Additionally, from Tuesday and through Friday, Northern Natural Gas Pipeline (Northern Nat) scheduled pipeline and station maintenance at pool points. They include Pampa North, Brownfield North Group, Beaver C and Beaver North, Beaver North Group, and from Mitchell to Gains.
“Brownfield North Group is a pool point covering the majority of the field area of the pipeline spanning from the Demarc line down to Hockley, TX,” Wood Mackenzie analyst Nadeem Ahmed said. The point covers Pampa North, Beaver C and Beaver North, Beaver North Group.
The operational capacity could be restricted to 411,000 MMBtu/d, according to Northern Nat. “Based on the last seven days’ average of 490,933 MMBtu/d, the potential cut for the duration of the maintenance would be 79,933 MMBtu/d,” Ahmed said.
Meanwhile, Mitchell and Gains is a pool point on the eastern leg of the pipeline in the Permian Basin at Gaines, TX. The operational capacity is set to be restricted to 385,000 MMBtu/d. Based on the last seven day average of 432,752 MMBtu/d, Ahmed said, 447,752 MMBtu/d could potentially be cut for the duration of the maintenance.
