Oil & Energy
Weekly US Natural Gas Prices Rise on Heatwave Forecasts Despite 16-Week Low in LNG Feedgas Flows
US natural gas markets edged higher over the week as weather forecasts pointed to above-normal temperatures, even as consumption remained muted and LNG feedgas flows hit a multi-week low.The front-month June futures contract price rose to $2.92 per million thermal units on Friday, up from $2.86/MMBtu on May 18.The front-month June contract price rose to $3.004/MMBtu from $2.864/MMBtu on May 15, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released on Thursday.Natural gas spot prices rose by $0.31/MMBtu to $3.19/MMBtu during the week ended May 20, according to the EIA, from $2.88/MMBtu the prior week.This comes despite a 0.9 billion cubic feet per day, or 1% decline in total US natural gas consumption during the week, led by a 1.6 Bcf/d, or 14% drop in demand from the residential and commercial sectors. Electric power burn demand, however, increased by 1 Bcf/d, or 3%, during the same period.This was attributed to above-normal temperatures across most of the country during the week, which increased cooling gas demand.At the same time, natural gas supplies declined slightly by 0.2 Bcf/d, or less than 1%, amid a reduction in Canadian imports into the US, according to data from LSEG.Meanwhile, LNG feedgas flows dropped to their lowest level in 16 weeks, at 15.1 Bcf on Tuesday, from a record high of 18.8 Bcf/d in April, due to spring maintenance outages at several leading export terminals, according to data from LSEG.Prices rose across most regional hubs during the week, with Transco Zone 6 NY seeing a $0.41/MMBtu increase, while SoCal reported a $0.07/MMBtu decrease.The net injection into storage for the week ended May 15 was 101 Bcf, up from 85 Bcf the prior week, bringing total gas inventories to 2,391 Bcf, according to EIA data. The injection was above analyst forecasts of 96 Bcf, indicating a bearish build, according to data compiled by Investing.com.During the same period last year, the EIA reported a net injection of 119 Bcf, with the five-year average for this period at 92 Bcf.All regions reported a net injection of working gas into storage for the week ended May 15, with East and South Central up 31 Bcf, bringing their inventories to 419 Bcf and 972 Bcf, respectively. The Pacific region is now at a 34% surplus relative to its five-year average, while South Central has just moved to a 1% surplus.According to Pinebrook Energy Advisors, this week's EIA report indicated a "looser fundamental balance than the prior week," which was attributed to lower weather-related consumption across most sectors.They, however, noted that the heatwave experienced late last week was outside the reporting window and should appear in the upcoming week's report. "For now, the market appears to be balancing a bearish near-term storage number against early signs of a summer of strong demand," the report said.Weather forecasts call for above-normal temperatures to persist across most of the country from May 29 to June 4, according to the National Weather Service, which is expected to add to cooling gas demand over the next few weeks.Meanwhile, the US gas rig count dropped by three from 128 the previous week to 125, in the week ending May 22, according to data from Baker Hughes (BKR) released Friday. That compares with 108 gas rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by 21 to 696 from 675 the previous week.A total of 34 liquefied natural gas-carrying vessels left US ports during the week, down by 3, compared to 37 vessels last week, with a total capacity of 128 Bcf, down by 13 Bcf compared to the prior week.In international markets, European TTF gas prices averaged $17.01/MMBtu for the week ended May 20, $1.33/MMBtu higher than the previous week.The Japan-Korea Marker averaged $18.33/MMBtu, about $1.40/MMBtu higher than the prior week.
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