King of Pain - Waha Price Collapse Signals Worsening Gas Supply Glut in the Permian
The U.S. natural gas market last week was again reminded of the hair-trigger conditions that Permian producers and marketers are operating under — with gas production pushing against available takeaway capacity, all it takes is an otherwise minor/routine maintenance event on even one West Texas takeaway pipeline to send regional gas prices spiraling into negative territory. Waha Hub gas prices last week collapsed to their lowest level ever, with intraday trades even going negative — meaning some had to pay the market to take their gas. This wasn’t the first time that’s happened in the Permian — a similar event occurred in late November 2018 — but it was the worst to date and signals a heightened supply glut in the region, at least until the first new takeaway pipeline comes online in the fourth quarter of this year. Today, we explain the recent price weakness in West Texas and implications for Permian basis in 2019.
