Natural gas prices in North America slowed this week as temperatures remained warm and storage inventories continued to rise.
NGI natural gas prices in Monterrey and Los Ramones, near the border with Texas, fell below $ 5.00 / MMBtu for the first time in more than a month. US futures prices for delivery in November and December also fell below the $ 5 mark this week.
Imports by pipeline from the United States were flat this week. The 10-day average level of pipeline imports was 6.01 Bcf / d through Thursday, according to NGI estimates. Imports from South Texas make up the bulk of that figure and were about 5 billion cubic feet per day Thursday, followed from West Texas at about 450 million cubic feet per day.
Going forward, more price volatility in Mexico is expected as winter approaches in the northern hemisphere.
A Federal Energy Regulatory Commission report predicts a Henry Hub futures price of $ 5.63 / MMBtu for the period November to February 2022, up 103% from the winter 2020-2021 futures price .
Production is slowly picking up in the United States and stagnating in Mexico, and supply concerns are driving record prices in Europe and Asia. According to the Energy Information Agency (EIA), total in-service gas stored in the United States as of Oct. 15 stood at 3,461 billion cubic feet, 151 billion cubic feet below the five-year average. Mexico lacks natural gas storage.
This week saw the start of the earnings season, and major oil companies expect production to pick up from next year. North American exploration and production companies are expected to increase their capital spending by 20% in 2022, Halliburton Co. CEO Jeff Miller said on Tuesday.
Energy policy continues to worry market players in Mexico. A source said Mexico GPI of NGI that at least one potential shipper had decided to stop continuing its marketing activities until there was more clarity on the counter-reform currently being proposed in the country’s Congress.
âEveryone is taking a more cautious stance,â the source said. âWe are going back to the situation as it was two decades ago. “
An infrastructure developer said Mexico GPI of NGI that the recent revocation of permits for storage terminals such as Monterra Energy LLC’s fuel terminal in Tuxpan was another sign of a poor working environment for the private sector.
Against this backdrop, this week a bipartisan group of Texas lawmakers called on the Biden administration to intervene on behalf of US energy companies operating in Mexico.
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The five-day line pack average from Sistrangas in Mexico was 6.918 Bcf / d on Wednesday (October 20), at the sweet spot of the optimum line pack of 6.86-7.29 Bcf needed to ensure sufficient pressure in the system.
On Wednesday, demand on Sitrangas was 4.676 Bcf, against 4.462 Bcf a week earlier. Mexican gas production injected into the system fell week / week to 1.285 Bcf from 1.324 Gcf. The treatment centers of Nuevo Pemex (368 MMcf), Burgos (307 MMcf) and Cactus (314 MMcf) were the main injection points.
According to Gadex calculations, US pipeline imports into the Sistrangas were 3,403 Bcf on Wednesday, compared to 3,234 Bcf on October 13. LNG imports into the Sistrangas were stable week / week at 7 MMcf.
At key trading points with Mexico, November futures rallied on Wednesday. The November Henry Hub contract closed at $ 5.188, up 8.2 cents. Agua Dulce rose 10.7 cents to $ 5.128, while Waha rose 9.4 cents to close at $ 4.908.
Houston Ship Channel prices for November were $ 5.079, up 10.7 cents.
In Mexico, NGI natural gas spot prices were down significantly from the previous week, but were rising day by day. Prices rose in the northeast on Wednesday, with Los Ramones up 8.3 cents to $ 4.996. Monterrey rose 8.1 cents to $ 5.890.
Tuxpan in Veracruz saw the spot price rise 8.3 cents to $ 5.499. In the West, the price of Guadalajara rose 7.7 cents to $ 5.695. Further north in El Encino, prices were $ 5.262, up 7.6 cents from the previous day.
In the YucatÃ¡n Peninsula, the spot price in MÃ©rida was $ 6.170 on Wednesday, up 8.7 cents.
Gas injections in the United States
The EIA reported a 92 billion cubic foot injection into natural gas storage for the week ending October 15, slightly above consensus but within range of expectations.
The EIA’s 92 Bcf injection was the sixth in a row to exceed the five-year average. The five-year average for the current week’s reporting period is a build of 69 Bcf, while the previous year period saw a net injection of 49 Bcf.
The central-south region, which is key to Mexico, injected 29 billion cubic feet into inventory, including 15 billion cubic feet of salt-free facilities and 14 billion cubic feet of salt.
Total gas operated in the South Central region was 1,108 Bcf for the base period, down from 1329 Bcf for the same period a year ago. The figure was 40 billion cubic feet lower than the average of 1,148 billion cubic feet in storage for the same day between 2017 and 2021, the EIA said.