NGI - Natural Gas Futures Rally for Third Straight Day, But Upside Said Limited

March 14, 2019 – Natural Gas Intelligence

Natural Gas Futures Rally for Third Straight Day, But Upside Said Limited

By Jeremiah Shelor

After the market initially expressed some disappointment over a large inventory withdrawal that came in on the bearish side of consensus, natural gas futures finished higher for the third straight session Thursday.

In the spot market, chilly temperatures on tap for the weekend supported gains across the Midwest, Midcontinent and Texas; the NGI Spot Gas National Avg. climbed 9.5 cents to $2.850/MMBtu…

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West Texas Run Continues

Forecasts advertising cooler temperatures by the weekend and into next week contributed to stronger spot prices through the middle third of the Lower 48 Thursday.

Radiant Solutions was calling for below-normal temperatures from the Midwest down into Texas over the next several days, including lows in the teens and 20s in Chicago and Minneapolis, and temperatures dropping down into the 30s and 40s further south in Dallas and Houston.

Chicago Citygate picked up 5.5 cents to average $2.740, while in the Midcontinent, Northern Natural Demarc added 10.5 cents to $2.705.

In East and South Texas, spot price gains were modest but widespread. Katy notched 6.5 cents to $2.800.

West Texas prices, meanwhile, posted another day of sharp gains. Waha jumped 68.0 cents to average $2.350. Amid pipeline constraints caused by rising associated gas production out of the Permian Basin, Waha has generally traded at a steep discount to Henry Hub in recent months, even veering into negative spot price territory last November. Waha physical basis has improved dramatically over the past week, going from minus $2.175 on March 7 to minus 52 cents Thursday.

RBN Energy LLC analyst Jason Ferguson attributed the stronger West Texas basis this week to a recent drop in production in the region.

“High winds led to power outages that impacted some processing plants,” Ferguson told NGI.