North American natural gas futures were stuck again this week as persistent supply surpluses did little to excite bulls.
The September New York Mercantile Exchange natural gas contract was trading at slightly below $2.000/MMBtu on Thursday afternoon.
Mexico end-users have been taking advantage of the opportunity. For the past 10-day period through Thursday, Mexico imported 7.02 Bcf/d of pipeline gas from the United States. That was an increase of 0.07 Bcf/d from the previous 10-day period, according to NGI calculations.
On Thursday, Mexico imported 7.09 Bcf/d of pipeline gas from the United States, 0.05 Bcf/d higher than on the same day last year. NGI markets analyst Josiah Clinedinst pointed out that Nueva Era pipeline's electronic bulletin board has not posted daily flow data, which means the actual flow figure may be higher than calculated.
Dropping Production
Mexico’s natural gas production has taken a decided downward turn this year. Output averaged 3.82 Bcf/d in June, down from 4.35 Bcf/d in the same month last year. Output has been down on a year/year basis each month since the start of 2024. Gas production also has fallen sequentially every month except May.
National oil company Petróleos Mexicanos (Pemex) accounted for 3.62 Bcf/d, or 95% of all production in June, down from 4.12 Bcf/d in the year-ago month.
The top five natural gas producing fields in June, all operated by Pemex, were Quesqui (552 MMcf/d), Ixachi (531 MMcf/d), Akal (302 MMcf/d), Maloob (139 MMcf/d) and Onel (122 MMcf/d).
Pemex, meanwhile, has continued to struggle financially. The state oil and gas giant reported a net loss of 255.9 billion pesos, or $13.9 billion, for the second quarter, compared with a profit of 25.4 billion pesos during the year-ago quarter. Associated gas production fell by 16% year/year.
Imports from the United States are accounting for more than 75% of Mexico’s gas market needs this summer, data from Wood Mackenzie show.
West Texas Outlet
In infrastructure news, the owners of the Whistler Pipeline LLP are developing another outlet for Permian Basin natural gas, which would serve liquefied natural gas projects along with Mexico end-users.
The 42-inch diameter Blackcomb Pipeline would move up to 2.5 Bcf/d more supply from West Texas to the Agua Dulce hub in South Texas. Agua Dulce is a key hub for Mexico and is the start of the 2.6 Bcf/d Sur de Texas-Tuxpan pipeline that moves U.S. gas to southeastern Mexico.
The system could be in service by the second half of 2026 and would offer much needed price relief for West Texas, which has seen repeated negative pricing this year.
NGI’s Waha hub traded in a range from negative 51.0 cents to $1.40 on Wednesday and averaged negative 22.0 cents. A year ago, the Permian benchmark averaged $2.080, NGI Daily Historical Data show. The Waha spot price fell as low as negative $4.595 this spring.
Mexico imports from West Texas are also rising and playing a more significant part of the import picture. Cross-border flows from West Texas into Mexico averaged 1.88 Bcf/d over the past 10 days, up by 0.18 bcf/d from the previous 10-day period, according to NGI calculations.
Mexico Prices
In Mexico on Wednesday, natural gas cash prices at Los Ramones rose by 13.0 cents day/day to $2.235, according to NGI data. Monterrey via the Mier-Monterrey system was up 12.7 cents to $2.007. Tuxpan in Veracruz via Cenagas saw the spot price rise 13.6 cents to $2.784.
Out West, the Guadalajara natural gas price jumped by 39.2 cents to $2.128 on Wednesday. Farther north in El Encino, prices via Tarahumara were 50.6 cents, 63.7 cents higher than the previous day, when prices were in the negative.
On the Yucatán Peninsula, the cash price at Mérida was $3.844 on Wednesday, up 14.7 cents.
U.S. Storage
On Thursday, the U.S. Energy Information Administration (EIA) reported an 18 Bcf injection into storage for the week ended July 26. The figure did little to move prices.
The South Central region, close to Mexico pipelines, again reported a withdrawal. The region saw a draw of 10 Bcf that included a 6 Bcf decrease in salt stocks and a loss of 3 Bcf in nonsalts. Totals sometimes do not add up to the sum due to independent rounding, EIA said.
For the week ended July 26, total working gas in the U.S. South Central region stood at 1,157 Bcf, up from 1,128 Bcf for the same time one year ago. The figure was 132 Bcf higher than the five-year average of 1,025 Bcf.
