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June 2022 — Energy News

Volatility In the Marketplace

Several factors impacting the volatile natural gas market

Recently there has been extreme volatility in the natural gas market. On June 14, gas was settled at $7.68/million BTU, down from the previous week's high of $9.43, but up from a year ago when it closed at $3.36.  

This level of change is extreme and unprecedented. Similar to the markets following Winter Storm Uri in February 2021, this level of volatility and uncertainty in the natural gas market is challenging for all. There are several key factors to keep an eye on as we move throughout the hot summer and into the cooler months.  

Production is steady – for now
Production of natural gas dipped in 2020 but has rebounded to pre-pandemic levels. However, as inflation increases, so do the costs associated with producing and transporting natural gas. This will ultimately begin to curtail production. Simultaneously, fears of a recession historically drive demand down, further complicating this situation.

Natural gas in storage is down
The amount of natural gas in storage in the U.S. is down 16.6% from last year and 14.5% below the 5-year average. This lack of supply will become concerning as we approach the winter months when we typically see the highest rate of usage. The anticipated increase in demand with a simultaneous decrease in supply will force prices higher than we’ve seen in recent years.

Temporary closure of LNG facility provides relief
Last week a liquid natural gas (LNG) facility caught on fire, forcing the facility to shut down until repairs can be made. With this facility offline – which is the second-largest exporter of LNG in the nation – the natural gas is no longer able to be exported. This gives a boost to our domestic supply, helping to decrease the national demand and lower the market price that we’ve seen this week.  

Warmer summer temperatures forecasted
Warmer than average temperatures are forecast throughout the country. The expected heat will spike the demand for electric power for cooling elements. Further, the heat will cause increased irrigation use for the nation's agriculture

International market impacted by Ukraine/Russia war
Russian exports of natural gas will reach record lows due to international sanctions, causing a shortage in the global market and a stark increase in prices. This increase in international demand for LNG is predicted to remain high throughout the summer.  

No end in sight
There is a lot happening right now to impact the natural gas market, and unfortunately, there is no end in sight. In its June 2022 Short-Term Energy Outlook, the U.S. Energy Information Administration predicts that U.S. natural gas prices will remain high throughout the year due to the many factors impacting supply and demand.

As always, WoodRiver Energy is working hard for you. If you have questions about how to further protect your natural gas budget, please contact your sales representative.

Market Data – June 2022

Weekly Natural Gas Storage (Values listed in Bcf)
Region
East
Midwest
Mountain
Pacific
South Central
Total
6/10/22
407
482
122
221
863
2,095
6/10/21
459
567
164
242
993
2,425
net change
-14.1
-12.1
-17
-13.3
-13
-13.4
Information provided by: https://ir.eia.gov/ngs/ngs.html
CME (Henry Hub) Natural Gas Futures (Values listed in dekatherms) 
Date
5/17/22
4/4/22
3/7/22
2/8/22
1/11/22
12/7/21
11/5/21
10/4/21
9/13/21
8/13/21
7/6/21
Price
$8.26
$5.72
$4.93
$4.30
$4.16
$3.60
$5.33
$5.80
$5.21
$3.95
$3.68
https://www.eia.gov/dnav/ng/hist/rngwhhdD.htm
Utility Costs of Gas (Values listed in dekatherms)
Month
June '22
May '22
April '22
March '22
February '22
January '22
December '21
November '21
October '21
September '21
August '21
July '21
June '21
Mid American - IA
$10.33
$9.16
$9.81
$9.29
$9.25
$9.36
$9.76
$9.67
$9.25
$7.99
$7.53
$7.11
$6.35
Alliant - IA
$9.48
$6.34
$5.56
$6.62
$8.01
$8.01
$8.08
$8.69
$8.60
$7.27
$7.14
$6.85
$6.42
Black Hills - IA
$4.97
$5.50
$6.78
$6.78
$6.86
$7.10
$6.27
$6.49
$6.69
$5.51
$5.06
$4.94
$4.97
Black Hills - NE
$9.18
$6.69
$6.03
$5.53
$5.95
$6.83
$6.08
$6.54
$6.81
$5.64
$5.30
$4.80
$4.40
Xcel Small Volume
$5.27
$5.27
$5.27
$4.93
$4.93
$4.93
$5.31
$5.31
$5.31
$4.11
$4.11
$4.11
$3.38
Xcel Large Volume
$5.22
$5.22
$5.22
$4.87
$4.87
$4.87
$5.25
$5.25
$5.25
$4.06
$4.06
$4.06
$3.27
Kansas Gas Service
$9.80
$8.61
$8.22
$8.35
$7.58
$7.46
$7.49
$6.46
$6.22
$5.85
$5.55
$5.11
$5.08
Midwest Energy
$9.41
$7.90
$7.03
$8.43
$7.96
$7.64
$8.19
$7.65
$6.54
$6.23
$5.86
$5.38
NA
Local First of the Month Markets (Values listed in dekatherms)
Month
June
May
April
March
February
January
December
November
October
September
August
July
June
NNG Ventura
$8.51
$6.87
$4.83
$4.52
$6.02
$7.21
$5.50
$5.95
$5.44
$4.01
$3.76
$3.41
$2.74
Chicago Citygates
$8.72
$7.11
$5.10
$4.53
$7.02
$5.68
$5.62
$6.29
$5.70
$4.22
$3.89
$3.46
$2.85
Colorado Interstate Gas
$8.42
$6.13
$4.84
$4.35
$4.77
$5.39
$4.91
$4.57
$4.79
$3.67
$3.78
$3.16
$2.67
SouthernStar
$8.50
$6.65
$4.77
$4.41
$6.68
$5.95
$5.59
$5.96
$5.58
$4.00
$3.78
$3.48
$2.83
Pandandle (PEPL)
$8.31
$6.62
$4.76
$4.62
$6.58
$5.38
$5.42
$6.01
$5.40
$3.96
$3.72
$3.33
$2.76
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