As bidweek continued into a second day Thursday (April 25), baseload prices maintained the weak tenor established in Wednesday’s opener, according to NGI’s Bidweek Alert (BWA).
Deal volumes were predominantly lower from Wednesday levels. Bidweek trading concludes on Friday.
Leading on volume, Dawn in the Midwest saw 249,000 MMBtu/d in total volumes traded in 64 deals. Its basis trading averaged at minus 18.5 cents, while fixed-price deals averaged at $1.435/MMBtu, BWA data show. Physical basis trading averaged minus 19.5 cents on Monday when no fixed trades were reported. These levels for May compared with Dawn’s April bidweek averages of $1.590 on a fixed-price basis and plus 1.25 cents in basis trade, according to NGI’s Bidweek Survey.
The Southeast’s Transco Zone 5 saw smaller volumes with 18 basis deals that averaged at plus 15.0 cents for May, BWA data show. This is down from Monday when basis deals averaged at plus 15.3 cents. By comparison, the hub in April averaged at plus 12.5 cents.
May could mark the start of additional flows of Appalachian Basin natural gas toward Transco Zone 5 via the long-delayed Mountain Valley Pipeline LLC (MVP), according to Equitrans Midstream Corp. After a seven-year battle and a congressional mandate rescued the system from legal and regulatory setbacks, MVP asked federal regulators this week for approval to start service by May 23.
EQT Corp., which announced in March it would acquire pipeline owner Equitrans, said baseload power demand in the Southeast is poised to grow significantly with the data center and artificial intelligence booms.
Appalachian pure-play EQT would begin getting more capacity via MVP to sell into Transco Zone 5 at a premium to Appalachian prices, NGI’s Forward Look data show.
According to Forward Look, Transco Zone 5 on Thursday was trading at a 55.5-cent premium to the Texas Eastern Transmission Co. M2, 30 receipt point in Appalachia for May. It was trading at a 72.3-cent premium for June, right around the time MVP is expected to be in service. At the same time, EQT said it would continue cutting 1 Bcf/d of production as U.S. natural gas prices remain near four-year lows.
EQT’s production cuts first started in February and amounted to a 30-35 Bcfe reduction in first quarter volumes. The company said the cuts could extend beyond May depending on market conditions.
Persistently weak natural gas prices have led other exploration and production companies to reduce production and drilling activities.
Nymex futures prices continued to struggle out of the mire they were driven into by weak demand and a supply glut. The U.S. Energy Information Administration (EIA) reported a 92 Bcf injection for the week ended April 19.
The build was a slightly bearish surprise against the median 89 Bcf expectation. It brought Lower 48 inventories to 2,425 Bcf, swelling the surplus to 655 Bcf, or 37% above the five-year average.
The May futures contract sank 1.5 cents day/day settling Thursday at $1.638. June futures were up less than 1 cent at $1.986. Mild weather suggests lackluster demand and more storage builds ahead.
NatGasWeather said, “We continue to expect there will be opportunity for surpluses to be considerably reduced when a sustained period of hotter/bullish weather patterns finally works in concert with tighter U.S production.” The firm said the earliest that would occur based on the latest weather data is the second half of May.
Looking ahead to the week ending April 26, early estimates submitted to Reuters ranged from injections of 42 Bcf to 95 Bcf, with an average increase of 47 Bcf.
