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NatGas Spot Prices Soar Even More than HH on Heat, Shortages

The price of natural gas for the NYMEX futures contract (July) based on the price at the benchmark Henry Hub, hit a new, 30-month high yesterday closing at $3.62/MMBtu. But that’s not even the biggest news. The spot price of natural gas at multiple locations across the country (including the Marcellus/Utica) is cooking, largely due to the hot temps in both the Pacific Northwest and the East Coast. The cash price at Algonquin city-gates (Boston area) rose about $1 to trade at $4.87/MMBtu, while Transco Zone 6 NY (New York City area) was up 79 cents at $3.93/MMBtu. Cove Point LNG (exports 100% Marcellus molecules) cash prices climbed 66.5 cents to $3.845.
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Why Did NYMEX Gas Futures Price Hit a 29-Month High Yesterday?

Yesterday the July NYMEX gas futures contract (the current contract) went up by 8.5 cents to settle at $3.42. The August NYMEX futures contract closed at $3.44, also up 8.5 cents on the day. The big question is why? The short answer is that less gas was put into storage than expected for this time of year. The slightly longer answer is that less gas went into storage because of the hot weather and all those air conditioners whirling using all that electricity and all that electricity gets generated in big part by burning natural gas. So the bottom line is this: Natural gas futures prices popped yesterday because of the weather.
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M-U Forward NatGas Prices Head Higher – Supply Can’t Keep Up

The price of natural gas traded on “forward” contracts for the fall at what used to be called the Dominion South (now called Eastern Gas Transmission) trading hub near Pittsburgh is up 23 cents (14%) for contracts in September and October. Forward prices are based on current spot prices. Translation: The market is strongly indicating it thinks the price of M-U gas is heading higher in the coming fall months.
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EIA Predicts Henry Hub Avg of $3.07 in 2021, up 54% from 2020

An interesting post by our favorite government agency, the U.S. Energy Information Administration (EIA) about their latest predictions for the price of natural gas at the benchmark Henry Hub. EIA predicts the average price at HH this year, in 2021, will end up being around $3.07 per million British thermal units (MMBtu). The average in 2020 was $1.998 (round it up to $2.00). So this year the average price will be some 54% higher than last year. What about 2022?
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NatGas Prices Soar as Excess Capacity Gone from M-U, Elsewhere

As temperatures rise across the U.S. and Americans flip on air conditioning which makes a big draw on the electric grid, stocks of natural gas in storage are decreasing. Natgas is used to generate electricity. When there’s less supply to meet existing or growing demand, economics 101 tells us the price of the good or service (in this case natural gas) goes up. And indeed that’s exactly what’s happening. As the price of natgas increases, so too does the share price for M-U drillers.
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New York Electric Prices Up 50%, NatGas Up 75% – Lack of New Pipes

The price of electricity and natural gas in New York State is through the roof. Average New York Independent System Operator (NYISO) power prices across major hubs increased by 50% year over year in May, and natural gas prices increased nearly 75% year over year. It’s a train wreck here in New York. And you can directly blame Andrew Cuomo and the Democrats in the NY legislature for blocking new natural gas pipelines. That’s the root cause. No pipelines = obscenely high prices for electricity and gas.
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TETCO Pipe Throttling 40% of M-U Southbound Gas to Last All Summer

Traders are crediting news from Enbridge’s Texas Eastern Transmission (TETCO) pipeline that a recent flow restriction enforced by the Pipeline and Hazardous Material Safety Administration (PHMSA) will continue through the end of summer with helping to spike the Henry Hub futures price of natgas, up 4.5% on Friday to close at $3.30/MMBtu.
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EIA Predicts HH $3.07 in 2021; Production Up, Consumption Down 2021

Each month our favorite government agency, the U.S. Energy Information Administration (EIA), issues a Short-Term Energy Outlook (STEO) report. The STEO covers all of the major energy sources produced and consumed in the country. The latest edition, issued yesterday, finds the analysts at EIA revising up the expected marketed production and consumption of natural gas in 3Q21. Also up is the expected average price for natural gas at the benchmark Henry Hub–now up to a predicted $3.07/MMBtu for all of 2021. However, EIA says natural gas consumption for all of 2021 will sink by half of one percent from 2020. Why?
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As Temps in Northeast Spike, M-U NatGas Spot Prices Spike Too

Weather always has been, and remains, THE prime factor in the price of natural gas. In wintertime cold temps lead to the use of more natural gas to burn as heating fuel. In the summer months, high temps mean more electricity is used to power air conditioning units. Last Friday forecasters predicted a spike in temps in the midsection and northeast parts of the country. Along with that forecast came a spike in the price of electric power in both regions, and closely tied to it, a spike in the price of natural gas in both regions.
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Is Dutch TTF Replacing Henry Hub as Gas Price Global Benchmark?

The Netherlands

Is the vaunted position of the Henry Hub (HH) natural gas trading hub in Lousiana in trouble as the de facto worldwide benchmark for the price of natural gas? According to an energy expert based in the Netherlands, the Dutch virtual trading hub Titel Transfer Facility (TTF) is “quickly becoming the global benchmark for natural gas” pricing, potentially eclipsing HH.
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MVP Delay to 2022 Spells More Trouble for M-U Gas Prices

Two weeks ago we brought you the sad news that completion and startup for Equitrans’ 303-mile Mountain Valley Pipeline (MVP) and the company’s 75-mile extension to it called MVP Southgate will now be delayed until 2022 and 2023 respectively (see Equitrans Delays MVP & Southgate In-Service Dates to 2022 & 2023). The delays are due to frivolous lawsuits brought by foreign-money-backed Big Green groups including the Sierra Club. The delay is, according to RBN Energy, creating a shortage of takeaway capacity in the Marcellus/Utica region and keeping prices for natgas in the M-U low.
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M-U Gas Prices Fall Due to Rising Production & Full Pipelines

Due to a severe winter storm in the nation’s midsection in February, natural gas spot prices across the country went crazy (see Cash NatGas Price in Oklahoma Hits $999/MMBtu; M-U Thru Roof Too). The price of gas traded at $1,200/MMBtu at one point in Oklahoma. Insane! Prices here in the M-U went sky-high too. But all good things must come to an end, and they did in early March (see All Good Things Come to an End: Gas Price Back to Pre-Storm Levels). Since early March, the physical spot price natgas sells for in the M-U has slumped even further. Why?
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EIA STEO Predicts NatGas Supply Goes Up, Demand Stays Down in 2021

The U.S. Energy Information Administration’s (EIA) most recent monthly short-term energy outlook (STEO) contains some disheartening numbers regarding natural gas production and consumption. EIA, with some of the best number crunchers in the business, predicts natural gas production will hit 91.41 billion cubic feet per day (Bcf/d) in 2021 and 93.29 Bcf/d in 2022. The current all-time high was 93.06 Bcf/d, hit in 2019 prior to the pandemic. That’s the good news. The bad news is that consumption (i.e. demand) is forecast to decrease even further this year and next year.
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M-U Production Up, but Lack of Pipe Capacity Keeps Gas Prices Low

According to S&P Global Platts, natural gas production from the Marcellus/Utica in 1Q21 is up nearly 1 billion cubic feet per day (Bcf/d), now averaging 33.2 Bcf/d. That’s an increase of 2.8% compared with 1Q20. The problem is the interstate transmission pipelines flowing M-U gas are nearly full and the increase in production means we are beginning to see too much natgas piling up, leading to lower spot prices here in the northeast. However, not all sub-regions in the M-U are seeing an uptick in production.
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EIA Revises NatGas & Power Consumption Up for 2021-2022

Good news. The expert forecasters at the U.S. Energy Information Administration (EIA) have had another look at their predictions for how much natural gas and electricity we will use here in the U.S. and decided to boost their projections for 2021 and 2022. Electric use will grow, EIA says, by 2.1% in 2021 over 2020. As for natural gas, EIA says average daily marketed gas production will increase by 610 million cubic feet per day (MMcf/d) in 2021 to 98.95 billion cubic feet (Bcf/d). EIA is now predicting natgas production in 2022 will increase by 1.7 Bcf/d to 100.63 Bcf/d. We’re pretty sure that would be a new, all-time record high.
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All Good Things Come to an End: Gas Price Back to Pre-Storm Levels

Just two weeks ago we reported on the historical, insanely high natural gas spot prices being paid across the country (see Cash NatGas Price in Oklahoma Hits $999/MMBtu; M-U Thru Roof Too). The price of gas traded at $1,200/MMBtu at one point in Oklahoma. Insane! Prices here in the M-U went sky-high too. But all good things must come to an end. Natgas prices have returned to earth, back to pre-winter storm levels.
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