Baseload natural gas prices were trending lower for April delivery as excess end-of-winter inventory levels kept bidders hesitant on the first day of bidweek trading Friday (March 22), according to NGI’s Bidweek Alert (BWA).
Trade was most active in Texas, where the supply glut has pushed Permian Basin prices negative, following in the footsteps of spot cash prices that have spent most of March below zero.
In West Texas, Waha fixed prices traded between negative 16.0 cents and negative 11.0 cents, averaging at a negative 13.5 cents/MMBtu in April bidweek trading, Bidweek Alert data showed. This is down from March baseload prices of between 50.0 cents and 70.0 cents. El Paso Permian was trading between negative 16.0 cents and a positive 35.0 cents to put it at a volume-weighted average of negative 5.5 cents.
If the trek into negative pricing holds through bidweek, West Texas April baseload prices could average below zero for the first time since March 2020, NGI’s historical bidweek data showed. April 2023 prices averaged at only 8.0 cents.
Record production levels in late 2023 and early 2024 coming alongside the warmest winter on record have led to an abundance of gas at the end of the heating season. Bearish sentiment has not released its grip on markets since early February as winter failed to offer any encore performances of its mid-January freeze.
However, production cuts did help put in a near-term bottom for cash prices. Whether those lows in February hold remains to be seen. April, the start of the traditional seven-month injection season, is typically a weak demand and price period for natural gas and so can sometimes mark the year’s bottom for physical prices.
Adding to the seasonal weak demand in Texas, maintenance on pipelines out of the Permian and further unplanned outages at the Freeport LNG terminal have added to its regional surpluses.
Maintenance on Permian Highway Pipeline LLC (PHP) and Whistler Pipeline constrained Permian outflows in March. Outages on Gulf Coast Express are expected to follow in April or May.
Whistler and PHP are intrastate pipelines and have no federal reporting requirements. However, Kinder Morgan Inc. confirmed the work. For Whistler, pipeline scrapes have indicated periods of reduced flows from Waha via the pipeline to interconnects near Agua Dulce and other South Texas markets.
Meanwhile, Freeport’s feed gas demand and liquefied natural gas production capacity is expected to remain limited into May after the terminal kicked off additional work on Trains 1 and 2 as it wrapped up two months of repairs to Train 3.
Fixed-priced bidweek trade on Friday also was active in the Rockies, California and Canada. PG&E Citygate was trading as the highest price in North America in a range of $2.400 to $2.530 for an average of $2.450, according to Bidweek Alert. That’s down from its March bidweek price of $3.015.
On the other end of the spectrum, Canadian prices were the rare area of strength, albeit in a tiny dose. NOVA/AECO C traded as low as C$1.620/GJ and as high as C$1.650 to average $1.640, higher by 1.0 cent from its March bidweek finish at an average C$1.630.
