The natural gas market has been doing its part in the fight against inflation this year, with low prices across the nation recently. However, the Permian Basin has gone a step beyond low prices, with Waha recording negative cash prices every day since March 12 according to data from Natural Gas Intelligence (NGI). With 14 consecutive gas days where prices were below $0.00/MMBtu, this ties the previous record for the longest streak of negative prices in Waha, which was recorded in the spring of 2019. Outright Waha cash prices have averaged -$0.59/MMBtu over the past week, down from the -$0.25/MMBtu price during the prior week. Meanwhile, Henry Hub cash moved in the opposite direction. Waha cash basis ( dark pink line in graph below) plunged to -$2.14/MMBtu this past week, down from -$1.63/MMBtu the week before.
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Waha Natural Gas Cash Basis Surges as Permian Outflows Grow
Don't Blame Me - What's Causing Negative Gas Prices in the Permian and How Long Will They Last?
Natural gas prices at the Waha Hub in West Texas have been below zero for going on two weeks — that’s outright negative cash prices, not basis, which means Permian producers are literally paying to have their gas taken away. Ample supply along with weak demand have prompted an early start to the injection season this year and are putting downward pressure on U.S. gas prices more broadly. But why all the craziness now? One of the best ways to get a handle on the Permian gas-market meshugah is to examine gas pipeline flows within the basin and without, which, as it turns out, is the focus of our upcoming School of Energy Master Class. Today's RBN blog is a blatant advertorial for that event where we’ll be discussing gas-flow analysis, pipeline modeling and how they help explain why Waha gas prices have gone sub-zero.
