North American natural gas forwards rallied across the 2024 strip during the May 2-8 trading period as sagging production readings and an incrementally supportive LNG export outlook stirred bullish optimism.
Benchmark Henry Hub set the tone, with June fixed prices rallying 25.5 cents week/week to reach $2.194/MMBtu, according to NGI’s Forward Look.
Negative Basis in Texas
Looking at basis dynamics, hubs near producing areas in Texas continued to trade at negative differentials to the national benchmark during the May 2-8 trading period, particularly in the constrained Permian Basin.
Waha finished the period at minus-$1.486 for June, down 9.0 cents week/week, while El Paso Permian June basis fell 6.5 cents to minus-$1.536.
Springtime maintenance has seen spot prices on Permian associated gas routinely trade in the negatives, a trend that has continued into the month of May.
The intrastate Permian Highway Pipeline, for instance, began maintenance during the May 2-8 trading period that the operator subsequently extended, keeping capacity on the system crimped for a few days longer.
This comes as the Gulf Coast Express Pipeline is scheduled to begin another round of maintenance during the upcoming week that would also result in capacity reductions and contribute to constraints on Permian producers.
The recent maintenance on Permian takeaway pipelines has coincided with notably weaker production readings. Wood Mackenzie’s sample as of Thursday showed U.S. production totaling 95.6 Bcf/d. That’s versus a recent seven-day average of 97.6 Bcf/d and off sharply versus year-earlier levels around 101.6 Bcf/d, according to the firm’s dataset.
Meanwhile, South Texas hubs posted healthy fixed price gains during the May 2-8 period but continued to trade at a discount to Henry Hub.
June fixed prices at Texas Eastern S. TX jumped 22.5 cents week/week to exit at $1.975. June basis at the location skidded 3.0 cents lower, however, falling to minus-21.2 cents, Forward Look data show.
Canadian Discounts
Elsewhere, Canadian forwards came under downward pressure for near-month pricing during the May 2-8 trading period.
Westcoast Station 2 June basis dropped 20.0 cents week/week to minus-$1.400, according to Forward Look. NOVA/AECO C exited the period at minus $1.196, a 19.3-cent swing lower.
Some recent pipeline maintenance events in the region may have impacted the near-term pricing outlook for Canadian locations.
Gas Transmission Northwest conducted a brief maintenance event that heavily restricted southbound flows through Kingsgate on the Idaho/Canada border, according to Wood Mackenzie analyst Magnus Gilje.
Meanwhile, maintenance that began Monday was limiting capacity through Westcoast Energy Inc.’s Station 4B South location. That work was expected to conclude Thursday, according to Gilje.
Rising Futures
Nymex natural gas futures rallied sharply during the period. A strengthening liquefied natural gas demand outlook seemed to catalyze the move higher for June prices.
Management for Cheniere Energy Inc. during an earnings call with analysts indicated the operator does not expect any major maintenance disruptions to its export activities in June.
Freeport LNG, meanwhile, has shown progress toward a return to full capacity, at least in terms of pipeline deliveries to the Texas export terminal.
On Thursday, flows to Freeport totaled around 1.7 Bcf/d, up sharply from negligible daily volumes earlier this spring amid operational issues at the facility, according to data from NGI’s LNG Export Tracker.
Still, not all recent developments on the LNG front have been supportive.
Media reports have fueled speculation around potential further delays for the Golden Pass LNG terminal.
ExxonMobil, which is developing the project with QatarEnergy, said late last year exports would begin in early 2025 instead of 2024.
If the Golden Pass start date were to slip from the first half of 2025 to the second half, it would merit a roughly 15.0-cent reduction in the Henry Hub price forecast through March 2026, East Daley Analytics group analysts said in a recent note.
“However, even with a delay at Golden Pass,” the firm “would still expect gas prices to run up heading into next winter and average around $3.75 in 2025,” the analysts said.
The East Daley analysts said they were modeling storage inventories below the five-year average “on a sustained basis” by April 2025.
“A delay at Golden Pass would remove around 219 Bcf of demand in the first half of the year and push back that inflection point for storage to June 2025,” they said. “The difference in 2026 and beyond to our forecast is marginal once the facility ramps up.”
