Winter’s Arrival Brings Substantial Gains for November Natural Gas Bidweek Prices

November 01, 2019 – NGI

Winter’s Arrival Brings Substantial Gains for November Natural Gas Bidweek Prices

By Leticia Gonzales

Mother Nature’s timing in unleashing frigid Arctic air on the United States resulted in some of the most extreme volatility the natural gas market has seen during bidweek in quite some time. The vast majority of markets posted hefty gains as frosty conditions and subzero temperatures spread across the country’s midsection, boosting NGI’s November Bidweek National Avg. to $2.375, up 37.0 cents month/month. […]

[…] “Keeping track of the roller-coaster ride of Permian gas prices and the drivers behind the highs and lows continues to keep heads spinning,” said RBN Energy analyst Jason Ferguson. “We expected the available takeaway capacity on GCX to hold Permian prices in positive territory (i.e., above zero), at least until ‘the holidays.’ Turns out that holiday in question may have been Columbus Day.”

Rampant production, which caused Permian prices to fluctuate in and out of negative territory throughout the spring and summer, is once again at the forefront of the most recent price weakness, according to RBN. Until GCX came online, gas production in the basin had been trending sideways for most of this year, with flows already having exhausted all the pipeline capacity for moving gas out of Waha to other regions of the United States and Mexico.

The Permian was also relying heavily on the local power-generation and gas-storage sectors to soak up as much production as possible, Ferguson said. Once GCX began full operation in late September, however, production immediately ramped higher, eclipsing the previous record highs of just over 10.0 Bcf/d and charging up to near 11.5 Bcf/d in recent days.

In addition to the sharp uptick in production, GCX pulled away some volumes from the previously mentioned power and storage operators in the Permian, and a small amount of gas was also diverted to GCX from other pipelines, particularly gas that had been flowing from the Permian north to the Midcontinent, according to Ferguson. […]

[…] Given the uncertainty of the chillier-than-normal conditions continuing through the rest of November, benchmark Henry Hub bidweek prices climbed just 16.5 cents to $2.595. The more moderate increases at the Gulf Coast pricing hub were also reflective of the healthy storage situation in the country that has masked record liquefied natural gas feed gas deliveries, which have consistently come in above 7 Bcf/d over the last week or so.

On Thursday, the Energy Information Administration reported that inventories had grown 89 Bcf week/week to 3,695 Bcf, propelling stocks as of Oct. 25 to a 559 Bcf surplus over last year and a 52 Bcf surplus to the five-year average. […]

[…] However, over the last two years, November flows have reached above 900 MMcf/d as early as Nov. 2 and maxed at 1,224 MMcf/d on Nov. 15, 2018, “meaning there is still room for some short-term upside for AGT Citygate prices, especially with temperatures dropping rapidly,” Genscape analyst Josh Garcia said.

As for November bidweek prices, Algonquin Citygate jumped $2.105 to average $3.945. Meanwhile, Transco Zone 6 NY was up $1.080 to $2.545.


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