Weekly Natural Gas Prices Rally Amid Early Blast of Winter, Flood-Induced Pipeline Closure
Weekly cash prices for natural gas gained ground due to the snow and frost conditions that originated in the west and migrated across the northern half of the country, creating robust heating demands.
NGIs weekly spot Gas National Avg. for the period November 15-19, climbed 18.5 cents to $ 4.875
A cool weather system, tracking from Mountain West mid-week, moved across the Midwest on Thursday and the Northeast on Friday, delivering rain, snow and frosty temperatures, NatGasWeather said.
While most of the southern United States enjoyed mild temperatures and arid conditions, the early winter explosion in the northern regions of the country was enough to keep blast furnaces up and running at that time of year and spot prices to rise in key regions known as natural gas consumption.
At the end of trading week, Algonquin Citygate near Boston was up 28.5 cents to $ 4,895 and Niagara in New York was up 42.5 cents to $ 4,750.
In addition, harsh weather in western Canada forced Enbridge Inc.’s Westcoast Energy to shut down part of its pipeline system that supplies gas to the Pacific Northwest. Torrential rains and flooding in British Columbia caused mudslides and required temporary closings.
As a result, weekly Northwest Sumas prices rose $ 1.075 to $ 5.670 while Malin rose 84.5 cents to $ 5.760. Both hubs serve the northwest.
Driven by robust demand for US exports, the Nymex contract rebounded for much of the week in December, hovering at $ 5.065 / MMBtu on Friday, up 6% from the end of the previous week.
Looking ahead, forecasters were expecting friendly weather for the weekend, but another cold to start the week ahead.
NatGasWeather said a weather system is expected to drift across the northern United States as early as Monday to “return to stronger demand”.
Further out, the forecaster added, snow and cool highs of 30 to 40 years were expected in the northern areas in the last days of November and early December.
[Actionable Insight: Did you know that NGI is one of only two Price Reporting Agencies that include trade data from the Intercontinental Exchange. Find out more.]
Natural gas futures rose four of the five days of the trading week, fueled by supply concerns in Europe, which further fuel demand for US exports of liquefied natural gas (LNG).
Europe is approaching winter with precariously low gas storage facilities following extreme weather conditions and increased demand in the course of 2021. The continent had expected an increased supply via a pipeline from Russia from November through to winter. However, despite the promise by Russian President Putin to increase gas deliveries this month, quantities have only increased last week.
In addition, during the week a German regulatory authority suspended the certification of the recently completed Nord Stream 2 pipeline in Russia for an indefinite period of time, which should begin transporting additional gas to Europe as early as January.
Without the extra Russian supplies, Germany and other countries across Europe are crying out for US gas. LNG feed gas volumes hovered near all-time highs of over 12 billion cubic feet earlier this month and hit that level again on Friday, according to NGI estimates.
“Europe may be forced to remain dependent on an already strained liquefied natural gas market, suggesting an increased likelihood of a persistent high price environment for much of the first half of next year,” said Rystad Energy analyst Zongqiang Luo.
US supply, meanwhile, appears sufficient to meet domestic demand, but inventories are far from overflowing.
The US Energy Information Administration (EIA) announced on Thursday that 26 billion cubic feet of natural gas had been injected into storage for the week ending November 12. The working gas in the storage facility was 3,644 billion cubic feet.
Still, stocks were 310 Bcf less than a year earlier and 81 Bcf below the five-year average of 3,725 Bcf.
Friday spot prices stumble
Bar prices cascaded up on Friday, dragged down by sharp declines in the west, where mild weather developed over the day and is expected to last through the weekend.
NGIs Spot Gas National Avg. Lose 7.5 cents Friday for weekend-Monday delivery on $ 4,880.
SoCal Citygate dropped $ 1.275 per day to an average of $ 5,500, while SoCal Border Avg. lost 41.0 cents to $ 5.080 and PG&E Citygate lost 26.5 cents to $ 6.095.
A winter blast of cool temperatures and rain penetrated the northeast on Friday, with forecasts calling for overnight lows of 20 to 30 years, according to the National Weather Service.
This boosted demand and higher prices at selected hubs. Tenn Zone 6 200L rose 69.0 cents to $ 5.750.
Much of the rest of the country experienced mild temperatures on Friday, but that should change early next week. A rain and snow weather system should move across the northern United States, delivering early frost to the Midwest and then another round of cold and rain to the northeast.
“Higher physical demand can coincide with increasing heating degree days … which may lead to a bullish spot market catalyst,” said the EBW Analytics Group.
Before the next wave of weather, Chicago Citygate rose half a cent to $ 4.815.
AccuWeather said Wednesday – the day before Thanksgiving – could prove to be the toughest day of the week, with snow and thunderstorms possible in the densely populated northeast.
“Several cities will face disruptive weather that could cause stress for millions flying in the sky and on highways,” said the forecaster. Severe conditions, including gusts of wind greater than 40 miles per hour, could affect key travel centers and long stretches of the freeway from New York City to Boston.
“We could see a huge mess and a real wrench on vacation trips,” said AccuWeather chief meteorologist Jon Porter.