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NGI Weekly Gas Price Index
Markets | Natural Gas Prices | NGI All News Access
Weekly natural gas cash prices soared as production struggled and expectations for robust summer demand mounted.
NGI’s Weekly Spot Gas National Avg. for the May 2-6 period jumped $1.075 cents to $7.800.
Fueled by forecasts for strong natural gas demand in the summer ahead and elevated calls for American exports of liquefied natural gas (LNG) amid the war in Ukraine, the June Nymex futures contract surged as well. It settled at $8.043/MMBtu to close the trading week on Friday, up 11% from the prior week’s finish.
Relatively weak natural gas output in the wake of blizzard-induced freeze-offs in late April intersected with spring maintenance projects. This left production about 2 Bcf below 2022 highs throughout most of the past week.
At the same time, the onset of early summer heat in the South, from Texas to Arizona, propelled seasonally strong cooling demand. The result: Surging physical prices across the Lower 48.
“You start seeing air conditioners cranking in early May, it’s going to impact prices,” Marex North America LLC’s Steve Blair, senior account executive, told NGI.
As the trading week closed, weekly prices at Carthage were up $1.205 to $7.735, while Chicago Citygate finished ahead $1.165 to $7.955 and Cove Point closed up $1.235 to $8.025.
Blair said it remained unclear how long it could take for output to fully ramp back up, while forecasts showed demand intensifying in the near term, with heat expected to become entrenched in the South over the week ahead. Temperatures are expected to climb in the Midwest and East, too.
“Production down, cooling demand rising – there could be even more upside ahead,” Blair said.
Futures rallied through most of the week – only losing ground Friday amid profit-taking — and soared past the $8 threshold, which had marked the high point of trading earlier in the year.
Forecasts called for intense heat throughout the summer months – building on highs in the 90s already in early May in southern Texas and the Southwest. The Farmers’ Almanac forecast called for a hotter-than-normal summer in 2022 – even after accounting for record heat over the past decade.
“No question about it: This summer weather is going to be remembered as a hot one nationwide,” the Almanac’s authors wrote.
Markets also powered ahead on intensifying concerns about supply weakness.
“Without production making significant gains, the market will not be able to handle things if this kind of heat sticks around,” Bespoke added. “If that pans out, we feel we easily can go over $10 in prompt month [pricing] over the next several weeks, barring massive supply gains.”
Additionally, Germany and other countries throughout Europe are clamoring for U.S. gas. LNG feed gas volumes hovered above 12 Bcf throughout the trading week, held back from record levels only by maintenance work at export facilities.
[Is it 2008 or 2022? Natural Gas is Knocking on $8.00’s Door: NGI’s Hub & Flow podcast delves into the fundamentals driving the spike in natural gas prices in the U.S. Listen now. ]
Europe is moving with haste to wean itself from Russian gas in part to protest the Kremlin’s invasion of Ukraine and in part to establish long-term energy security. Countries across the continent no longer view Russia as a reliable or safe source of energy. They are looking to U.S. LNG to help fill the void, feeding expectations for strong export demand through 2022 and beyond.
U.S. supplies are under pressure as a result of all this. The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 77 Bcf natural gas into storage for the week ended April 29. The print was in line with the five-year average injection of 78 Bcf but not enough to address storage deficits.
The injection lifted inventories to 1,567 Bcf. Still, that left stocks below the year-earlier level of 1,949 Bcf and the five-year average of 1,873 Bcf.
Spot gas prices declined Friday after the massive rally earlier in the week.
NGI’s Spot Gas National Avg. dipped 1.5 cents to close at $7.985.
Physical markets were led lower by price declines in California, where comfortable temperatures in the 60s and 70s settled in on Friday and were expected to hang around for several days.
SoCal Citygate dropped 27.5 cents day/day to average $7.950, while Southern Border, PG&E fell 14.5 cents to $7.945 and SoCal Border Avg. lost 16.5 cents to $7.970.
Elsewhere, prices were mixed in the central United States and East. Joliet in the Midwest shed 5.5 cents to $7.970, but Columbia Gas in Appalachia gained 5.5 cents to $7.650.
NatGasWeather said over the weekend and into the week ahead, rain and thunderstorms were expected to push across the northern United States, along with mild to cool overnight lows of 30s and 40s.
The southern third of the country, however, “will be warm to hot” with highs of 70s to 90s, along with highs around 100 across Southwest deserts, Texas and the Southern Plains, the forecaster said.
Heat should spread across the Great Lakes and Missouri Valley over the coming week, with highs near 90 in some areas, igniting early season cooling demand in parts of the North, the firm said.
Looking to mid-May, NatGasWeather expects another round of weather systems to track across the west-central and northern United States with showers and moderate highs of 50s to 70s. But the southern United States is projected to remain hot, baking under highs from the 80s to 100. The most intense heat is expected to fester in Texas and the Southwest.
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