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NGI Weekly Natural Gas Price Index
Market | Natural Gas Prices | All NGI News Access
During the four-day trading period from November 30 to December, spot natural gas prices fell like dominoes. With generally mild weather weakening demand, the natural gas delivery date in December is March. At the end of the trading period, the daily natural gas transaction price at multiple locations in the United States was below $4.00/MMBtu, and NGI's weekly spot natural gas national average price fell by 86.5 cents to $4.145.
The warmth is expected to continue for a few more weeks-at least-natural gas futures have also collapsed. By Friday, the January Nymex natural gas futures contract had fallen from the settlement price of US$5.477 last Friday to US$4.132.
Although the temperature in most parts of the country is higher than normal, there are still parts of the country experiencing cold. For example, the overnight low in the Northeast dropped to 10 to 30 degrees, which boosted heating demand for most of the week.
During the four-day trading period, prices in the region, especially the New England region, soared, and even soared to double-digit areas. At PNGTS, the spot natural gas price reached $12.00, but the average price last week was $7.900, down 33.5 cents. Algonquin Citygate plunged 99.5 cents a week, with an average price of US$6.365. Transco Zone 6 NY prices fell by 90.0 cents to an average of 4.000 US dollars.
There will be some cold weather on the west coast over the weekend, but the weekend’s gains will not be enough to prevent the area from falling sharply every week. The Northwest Wyoming Pool fell 90.0 cents a week to an average of $3.845. PG&E Citygate fell US$1.135 to US$4.745.
The losses in other parts of the country were equally severe. The average price of Henry Hub this week was US$4.155, down 69.5 cents. In Texas, the cash price fell below $4.00.
Continued mild forecasts have dashed hopes that cold weather will eventually come, and cut demand expected through December. The losses on the futures curve have come quickly and have been substantial since the beginning of this week. Four days after losing money, the January futures contract on the New York Mercantile Exchange plunged by $1.42.
There have been some fluctuations in weather data, especially in the last few operations. In fact, the overnight data before the Friday meeting indicated that cold air will enter the northern United States in the middle of this month. Due to the cool changes, the January contract hit an intraday high of $4.285. However, the weather model that was subsequently ran backtracked in the upcoming cold snap, cutting back on revenue. Last Friday's immediate monthly settlement price was US$4.132, which was at the low end of the trading range of approximately 22 cents.
"It is very noteworthy that the model consensus still supports the warm bias model," Bespoke Weather Services said.
Forecasters said that the stubbornly moderate outlook may push prices below $4.00 next week. Even with some mild cool changes, the risks of the new days following the fairly warm forecast may continue to put pressure on the market.
"However, this is far from a bold decision." Gasoline prices have now fallen below $4.10. "If the weekend model becomes significantly colder, there must be a solid upside risk," Bespoke said.
Even though most of the winter has not yet arrived, several market analysts pointed out that the March/April spread, known as the widow maker, has shrunk significantly in recent weeks. The spread is an important indicator of the market's attention to winter supply.
Even after Friday’s rise, Mobius Risk Group pointed out that the March/April spread was less than 20 cents. The company said that if the weather is still warm by the end of the year, the spread may be flat, but if the weather model starts to depict a more normal pattern, there is "a significant risk of a sharp upward move."
"The risk premium has almost disappeared this winter, at least from the point of view of the spread," Mobius said. "A potential price below $4.00 near the front end of the curve should not be taken as a reason to believe that winter is over."
However, it is difficult to deny the tremendous improvement in US supplies in the past few months. The near-perfect temperature background quickly stimulated a substantial rebuilding of storage inventories, which once faced the risk of insufficient domestic demand in the next few months.
The latest government storage report does show that the deficit has moderately widened to the five-year average. According to the U.S. Energy Information Administration (EIA), inventories fell by 58 Bcf for the week ending November 26 to 3,564 Bcf, which is 375 Bcf lower than the same period last year and 86 Bcf lower than the five-year average.
According to EIA data, by region, inventory in the Midwest fell by 23 Bcf, and inventory in the East fell by 22 Bcf. Inventories in the central and southern regions fell by 12 Bcf, of which non-salt facilities fell by 8 Bcf and salt facilities fell by 3 Bcf.
The Schork Group stated that at this time of the season, the transportation of the salt works was "abnormal." Salt inventories fell to 335 Bcf, and the seasonally adjusted surplus fell 317 basis points to a six-week low of 7.8% (24 Bcf.)
Overall, in the first two reports of this season, a total of 80 Bcf has been withdrawn from storage. “This is the high end of the early season,” Schork Group said.
However, the continued warming on the radar has largely prevented the typical inventory at this time of year from falling further. Early estimates indicate that the inventory at the end of March was about 1.5 Tcf.
When discussing the latest EIA data and storage forecasts for the next few weeks, Jack Weixel, a natural gas analyst at IHS Markit, said: “We will now have no snow for 230 consecutive days. Today it is 74 in Denver. It’s almost hot.”
At the same time, demand for liquefied natural gas (LNG) is expected to remain strong throughout the winter, but the sharp rise in US prices in the fall is unlikely to reach the same level. According to EBW Analytics Group, the close correlation between Nymex futures and Dutch Property Transfer Facility (TTF) natural gas futures in September and early October has collapsed in the past month. According to the company, the main basic contact mechanism is an extremely cold winter, and the risk that natural gas storage will drop to a dangerously low level is one-tenth. This will prompt Nymex natural gas to converge with global prices, so that U.S. LNG exports are economically infeasible and the natural gas is reserved for domestic use.
“However, since the end-of-winter storage trajectory has soared by 400 Bcf since mid-September, the risk reduction of this extreme situation has caused Nymex futures to reprice the winter risk premium and break the short-term correlation with TTF pricing,” EBW Senior Natural Gas Analyst Eli Rubin said. "Global LNG competition still plays a key role in the local winter basis premium in New England, but it is unlikely to affect New York Mercantile Exchange futures."
Most U.S. spot markets continued to weaken during the weekend for delivery from Friday to Monday. Although the weather in the region continued to be cold, the strong gains in the Northeast region quickly dissipated on Thursday.
In New England, the spot natural gas price in Iroquois 2 zone fell by US$2.085, and the average delivery price of natural gas as of Monday was US$4.600, while the price of natural gas in the non-New York area of Transco 6 Zone fell by 40.5 cents to US$3.555.
Upstream, Eastern Texas M-3, cash on delivery fell 37.0 cents to 3.510 US dollars.
As the National Weather Service (NWS) stated that New England was preparing for more cold and squally northwest winds, there was a price discount. In addition, there may be persistent lake-effect snow showers early on Sunday, and there may be a few inches of snow in the eastern part of the Upper Peninsula of Michigan and the Tag Mountain Plateau in New York.
At the same time, according to the National Weather Service, high-level disturbances into the northwest will be combined with the Arctic air mass north of the US-Canada border, and snow will occur in the northern high plains early on Saturday. It may also snow in the Far North Rocky Mountains and Washington Falls.
By Sunday, a low-pressure development zone in central Montana is expected to move eastward with associated precipitation, resulting in large patches of medium to heavy snow from northeastern Montana to northern Minnesota.
In other parts of the country, sunlight and warmth will continue, limiting any heating demand and reducing prices again. Prices in the Southeast and the entire state of Louisiana were limited to around 20.0 cents, as were prices in the Mid-Continent and Midwest. During the three-day refueling period, the Henry Hub spot gasoline price fell 18.5 cents to 3.855 US dollars.
In Texas, Waha cash fell 9.5 cents to $3.515.
The only region that rose on Friday was the west. In the Rocky Mountains, as of Monday, the price of natural gas in Northwest Sumas rose 17.0 cents to $3.885. SoCal Citygate price rose 14.5 cents to 5.140 US dollars, while Malin rose 19.5 cents to 3.910 US dollars.
At the same time, Southern California Gas Corporation recently notified customers that the Aliso Canyon storage facility is "close to the maximum authorized capacity on November 4, 2021," and the California Public Utilities Commission decided to increase the capacity in early November. SoCalGas' latest maintenance plan indicates that the storage facility can be filled by Friday (December 3).
However, Wood Mackenzie stated that as of December 1, Aliso Canyon's inventory level was 41.61 Bcf, slightly higher than the agreed maximum.
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