Commodities
Natural Gas Prices Fall For 2nd Straight Week Amid Bearish Storage Build, Weak LNG Feedgas Flows
US natural gas markets were down for yet another week, following a larger-than-expected storage build and lower average LNG feedgas flows so far this month.In the futures market, the Nymex front-month contract dropped to $3.04 per million British thermal units on Friday, from $3.22/MMBtu on June 5.Natural gas spot prices, however, rose by $0.31/MMBtu to $3.26/MMBtu during the week ended June 10, from $2.95/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released on Thursday.Prices rose across all major regional hubs this week, with a $0.16/MMBtu rise at the Waha Hub and a $0.94/MMBtu surge at Florida Gas Zone 3.This comes amid an increase in natural gas consumption by 2.7 billion cubic feet per day, or 3% compared to the previous week, according to LSEG data, driven by 3.5 Bcf/d, or 10% increase in consumption from the power sector, due to above-normal temperatures across Northern and Central US over the past week.Total gas supplies also declined during the period, by 0.5 Bcf/d, due to a 0.7 Bcf/d drop in output, which wasn't enough to offset the drop in consumption.US LNG Feedgas flows recovered this week, averaging over 17 Bcf/d, after hitting a multi-month low late last week, due to ongoing spring maintenance across several leading LNG facilities, which continued to weigh on flows. However, the June average was 16.5 Bcf/d, down from 17.5 Bcf/d in May, according to TradingEconomics.The net injection into storage for the week ended June 5 was 108 Bcf, up from 95 Bcf the prior week, bringing total gas inventories to 2,686 Bcf, according to EIA data.For the first time in weeks, the net build came in above consensus estimates at 101 Bcf, was ahead of the five-year average for this period at 95 Bcf, and was just shy of the prior year's 110 Bcf, according to data compiled by Investing.com, making it a bearish signal for the markets.All regions reported a net injection of working gas into storage for the week ended June 5, with inventories across the Pacific, Mountain, and Midwest regions higher by 15%, 6%, and 1%, respectively, compared to the prior year, while South Central and East were lower by 5% and 2%.At 2,686 Bcf, US working gas inventories were 5 Bcf, or less than 1% below the corresponding period a year ago, while still posting a 151 Bcf, or 6% surplus compared to the five-year average for this period.According to Pinebrook Energy Advisors, the latest storage reports point towards "weaker natural gas consumption than preliminary estimates had implied," while also hinting at potentially stronger-than-expected wind and solar generation.Weather forecasts have continued to indicate above-normal temperatures across most of the country from June 19 to June 25, according to the National Weather Service, leading to increased demand for space cooling and, thus, higher gas-fired power burn.A total of 34 liquefied natural gas-carrying vessels left US ports during the week, up from 29 vessels the previous week, with a total capacity of 129 Bcf, up by 18 Bcf from the prior week.Meanwhile, the US gas rig count slipped by three from 124 the previous week to 121 in the week ending June 12, according to data from Baker Hughes (BKR) released Friday. That compares with 113 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 10 to 742 from 732 the previous week.In international markets, European TTF gas prices averaged $16.65/MMBtu for the week ended June 10, $0.38/MMBtu higher than the previous week. Meanwhile, the Japan-Korea Marker averaged $18.85/MMBtu, about $0.30/MMBtu higher than the prior week.
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