Baseload natural gas prices were trending lower for May delivery as mild weather and a glut of supply in Texas kept bidders from rushing to buy on the first day of bidweek trading Wednesday (April 24), according to NGI’s Bidweek Alert (BWA).
In West Texas, Waha traded at fixed prices between negative 44.0 cents and positive 40.0 cents, to average negative 35.0 cents. The location averaged negative 11.0 cents for April baseload, according to NGI’s Bidweek Survey.
Meanwhile, trading in the daily spot market has improved in recent days, with averages turning positive for the first time in over a month. NGI’s daily cash price data showed Waha up 2.5 cents to an average of 6.5 cents Wednesday.
However, the supply glut in the Permian Basin, a persistent issue, coupled with little help from weather as the shoulder season gets underway, could potentially keep baseload price averages negative through bidweek.
Weather.com expects temperatures in Texas to range from lows in the comfortable 70s to highs in the low 80s in the coming 10 days. Nationally, only southern portions of the country are expected to see above-average temperatures, limiting early-season cooling demand.
Meanwhile, Wood Mackenzie data scrapes show output holding steady around 99 Bcf/d. Producer cuts amid weak prices are helping to minimize natural gas storage injections in recent weeks. The market is awaiting indication from producers in upcoming quarterly earnings reports as to how long they plan to maintain the cuts.
As producer cuts hold, maintenance on natural gas pipelines drove steep drops in output in the Appalachian and Permian basins.
Although intrastate pipelines have no federal reporting requirements, making their maintenance less visible, Kinder Morgan Inc. (KMI) confirmed some projects via its electronic bulletin board.
Gulf Coast Express Pipeline LLC would be overhauling compressor stations until May 2, with another round of similar work planned May 14-21, KMI said. The company also plans to inspect compressors on the 2 Bcf/d Permian Highway Pipeline May 7-12 that could reduce capacity to as low as 1.45 Bcf/d.
“Although another three to four weeks of pipeline maintenance are ahead, signs of falling output may steady over the next two months,” EBW Analytics Group analyst Eli Rubin said Tuesday. The end of the pipeline maintenance season could add back around 2 Bcf/d of natural gas into the market, Rubin said.
On the LNG front, Freeport’s feed gas demand and liquefied natural gas production capacity is expected to remain limited into May after the terminal kicked off additional work on Trains 1 and 2. Meanwhile, after wrapping up two months of repairs to Train 3, it tripped again Tuesday. It restarted Wednesday, however, according to a state regulatory filing.
NGI’s North American LNG Export Tracker showed total deliveries to U.S. LNG export facilities at 12.4 Bcf Wednesday, down from 12.8 Bcf a day earlier.
