Mild spring weather with low gas demand combined with pipeline maintenance to drag spot natural gas prices at the Waha hub in West Texas into negative territory this week.
Next-day prices for Wednesday at the Waha hub in the Permian closed on Tuesday at -$0.35 per million British thermal units (MMBtu), per data from Refinitiv cited by Reuters.
The last time prices at Waha sank to below zero was in October 2022, as spot prices were facing pressure from the unfortunate combination of unseasonably warm weather, flourishing production, and takeaway capacity constraints.
Back then, intraday pricing levels were in negative territory, but the settlements in those days were in positive territory.
On Tuesday, however, Waha spot natural gas prices settled in negative territory, for the first time since October 2020, according to Refinitiv data.
The downward pressure on prices came from lower demand amid mild weather and increased maintenance on gas pipelines in this period of generally low consumption.
The U.S. benchmark, Henry Hub, fell early on Wednesday amid low demand after gaining 1% to a one-week high on Tuesday.
Yesterday’s gains resulted from estimated lower U.S. daily natural gas production and lower imports from Canada, where wildfires shut in some oil and gas production.
As of early on Tuesday, wildfires in Canada had resulted in the shut-in of 319,000 barrels of oil equivalent per day (boepd) from the country’s oil and natural gas production, or 3.7% of all output, as operators shut down producing fields and processing plants.
Canada’s natural gas exports to the U.S. were at a 25-month low of 6.7 bcfd on Tuesday, per Refinitiv data.
Between May 9 and 15, natural gas demand in the United States is expected to be low, according to NatGasWeather.com. National demand is set to be light in the coming days amid mild and comfortable temperatures despite heavy showers and thunderstorms expected across the U.S.
By Tom Kool for Oilprice.com
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We need to be seeking more conventional oil, using more gas in autos and trucks. We are a one trick pony with a two trick product. Stop all flaring and pro-rate these so-called oil wells like we used to have- slash production and balance demand.