Quantum Commodity Intelligence – U.S. natural gas prices gave up most of their mid-month gains in the week ended August 23 amid a stronger-than-expected inventory build, while consumption is expected to decline due to slowing demand for summer cooling solutions.
Data from the Energy Information Administration (EIA) this week showed that injections added 35 billion cubic feet (Bcf) of gas to storage during the week ended August 16, more than the 29 Bcf forecast by analysts in a Reuters poll.
This resulted in gas inventories being around 13 percent higher than normal for this time of year, and although some producers continued to cut production, particularly in the Haynesville and Marcellus gas fields, there was no supply shortage.
The Sep24 Henry Hub The contract in the early afternoon of Eastern Time on Friday was 2.02 USD/mmBtua 2% decline on the day and a decline of over 10% from last week’s monthly highs.
The oversupply of physical gas in Texas resulted in the spot price at the Waha hub being negative throughout August, meaning that drillers in the Permian region have to pay to dispose of the associated gas production.
Whaa The price below Henry Hub is around -1 USD/mmBtu because ongoing pipeline maintenance severely limits capacity and causes bottlenecks in gas transportation to consumer regions.
There is no improvement in sight given the ever-increasing oil production. The associated production of associated gas is likely to increase further this year and next.
capacity
However, capacity is expected to increase following the commissioning of the 580-mile Matterhorn Express Pipeline, which is expected to come into service in the third quarter of 2024 and can transport up to 2.5 Bcf/d of natural gas from the Waha Hub in West Texas to Katy, Texas.
The pipeline will receive natural gas from upstream connections in the Permian Basin and from direct connections at processing facilities in the Midland Basin before connecting to the Agua Blanca Pipeline.
Meanwhile, the markets have found some support in Liquefied petroleum gas Exports are largely back to capacity levels, with the EIA reporting 26 shipments leaving the U.S. in the week ending August 21.
These included 8 from Sabine Pass, 5 from Corpus Christi, 4 from Freeport, 3 from Cameron and Calcasieu Pass, 2 from Cove Point and 1 from Elba Island with a combined LNG transport capacity of 99 Bcf.
