Baseload natural gas prices continued to be mixed on Friday, the second day of August bidweek trading, with the bias to the downside at hubs in major producing regions.
NGI’s Bidweek Alert (BWA) showed weakness in Texas and the Rockies – important production regions – on the second day of a bidweek trading period that culminates July 29.
Looking at fixed prices, Waha in West Texas averaged 14.0 cents/MMBtu. This compared with an average of 30.0 cents on Day 1 and 56.0 cents for July bidweek. In the Rockies, CIG fixed prices averaged $1.540 on Day 2, down from $1.595 on day 1 and below the July bidweek price of $2.015.
The weakness came even as U.S. demand for natural gas averaged 47.7 Bcf/d during the last full week of July, according to Wood Mackenzie data. Heat blanketed the country during the month and sent temperatures soaring into the 100s across the Lone Star State.
NatGasWeather forecasts show August could be another “impressively hot” month, with a weather pattern for the five- to 15-day forecast period expected to bring temperature highs of mid-80s to 100s across the United States for very strong demand.
Meanwhile, more than three weeks after former Hurricane Beryl made landfall in Texas, knocking out power and forcing Freeport LNG Development LP shut, feed gas demand has been improving. Freeport was taking delivery of 1.52 Bcf/d of natural gas Friday (July 26), up from 1.26 Bcf/d a day earlier. Feed gas flows to liquefied natural gas facilities at 12.9 Bcf/d Friday were down from 13.05 Bcf/d Thursday, according to NGI’s U.S. LNG Export Flow Tracker.
Countering the demand, Lower 48 dry natural gas production continued to rebound after spring cuts took output below 100 Bcf/d. Wood Mackenzie estimated Friday output returned to average above 102 Bcf/d during the recent seven days.
“Supply has been topical,” analysts with Tudor, Pickering, Holt & Co. said. “High production drove lower confidence in strip prices” even as natural gas supplies remain robust despite “the historically undersupplied build season.”
After the U.S. Energy Information Administration (EIA) delivered a surprising 22 Bcf injection for the week ended July 19 – which was above expectations, but lighter against historical averages – August natural gas futures were sent on a downslide. The prompt-month contract settled Friday at $2.006, off 3.5 cents day/day.
NatGasWeather said just when bulls thought the balance was tighter and had reasons for prices to rally, Thursday’s EIA report “brought the natural gas markets back to reality and where the supply/demand balance isn’t as tight as thought.”
The EIA storage print for the week ending July 26 was expected to outline an addition ranging from 15 Bcf to 51 Bcf, with an average increase of 39 Bcf, according to an early Reuters poll.
That compares with an increase of 15 Bcf during the same week last year and a five-year average increase of 33 Bcf.
