U.S. natural gas prices in the spot and futures markets fell in trading Oct. 7 amid looser supply-demand dynamics that have put U.S. gas storage on track for potentially the biggest weekly injection of all in the next Energy Information Administration report times to see.
Spot gas prices in every U.S. region fell on Oct. 7 as they traded for Oct. 8-10 streams, even in the Midwest and parts of the Appalachian Mountains, where the first cold snap of the season promises to slow gas demand boost heating.
Cash Henry Hub fell 67.50 cents to $6.23/MMBtu at pre-booking, price data from S&P Global Commodity Insights showed, in line with the 40 to 90 cents daily losses observed for most spot hubs .
In the futures market, the front month contract NYMEX Henry Hub lost around 22.40 cents from its settlement the previous day to trade at $6.748/MMBtu on Oct. 7, data released by CME Group shows.
The downward momentum in pricing follows the EIA, which reported a much larger than expected build in weekly storage on Oct. 6. The build of 129 Bcf for the week ended September 30th beat market expectations of around 114 Bcf and exceeded the yearly median build of 82 Bcf by 57%.
An even bigger buildup is likely for the next weekly gas storage report, which would narrow the deficit to the five-year average at its lowest level since January, according to a new forecast from S&P Global.
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On October 7th, S&P Global’s supply-demand model forecast a net build of 134 Bcf for the week ended October 7th, beating the existing all-time record of 132 Bcf set in June 2015. A surge of that magnitude would mark a fourth straight week of triple-digit builds – a streak seen only twice in the past decade.
Robust gas production at a time of slacking off-season demand, combined with maintenance on LNG export facilities and a recent hurricane that drastically reduced gas demand in the Southeast, has put more supply on the market than demand over the past seven days.
Actions by pipeline and storage facility operators have allowed the excess supply to be injected into storage, Eric Brooks, gas storage analyst at S&P Global, said in an email.
“Many pipelines and storage facilities have recently issued exceptions to their excess injection limits that have historically limited storage injection rates in the latter half of the injection season,” Brooks said.
“With these injection restrictions now virtually off the table, we are seeing record injection rates in the eastern half of the country that have resulted in a much smaller inventory deficit today than it has over the summer injection season.”
Source: Platts
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