Denver—Balance-2021 forwards prices at the US benchmark Henry Hub were at an eight-week low in recent trading, as the market turns increasingly bearish on the outlook for summer-season gas supply.
After trading at nearly $3.40/MMBtu just one month ago, the calendar-year curve has since lost over 20% of its value, settling earlier this week at just $2.63/MMBtu. On March 17, S&P Global Platts' most recently published M2MS data showed the forward average up just 3 cents from its low to $2.66/MMBtu.In the cash market, prices at the Henry Hub have come under similar pressure. On March 18, the benchmark index was trading at just $2.46/MMBtu -- also a nearly eight-week low, data from the Intercontinental Exchange and Platts showed.
The downward price trend, also apparent in all of Platts' regional ICE Gas, or GIA, Indices, comes as seasonal demand continues to ease and production surges, slowing the drawdown in gas storage.
Supply, demandMarch-to-date, US gas demand has underwhelmed expectations as mild temperatures in the Northeast and the Midwest, both key heating-demand regions, leave the US res-comm figure lagging.
Through March 18, gas demand from US homes and businesses has averaged 34.7 Bcf/d–about 1.1 Bcf/d below its weather-normal average for the month, S&P Global Platts Analytics data showed.
Higher-than-anticipated US power burn and LNG feedgas demand this month have helped to recoup some of that deficit. The remaining supply length, however, has still weighed on the market.
A surprisingly strong rebound in production from last month's freeze-offs hasn't helped either.
March 1 to date, total domestic output has averaged 92.3 Bcf/d -- up about 800 MMcf/d compared to its 30-day average prior to the mid-February production freeze-offs in Texas and the Midcontinent.
StorageOn March 18, the US Energy Information Administration reported its second-consecutive bearish withdrawal from gas storage with just 11 Bcf taken from inventory in the week ending March 12.
Over the next two weeks, Platts Analytics forecast a total drawdown of 40 Bcf, likely bringing the withdrawal season to a close with well over 1.7 Tcf in the ground -- just 100 Bcf below the average.
Compared to the outlook one month ago, seasonal injection demand now appears more likely to trend close to average historical levels, keeping the US market well supplied through summer.
