South-Central storage falls 14 Bcf in week ended July 2
Henry Hub-, Houston Ship-2021 curve hit annual highs
LNG, pipeline export demand outweigh provide progress
A uncommon early July withdrawal from gasoline storage within the South-Central US final week has widened the area’s stock deficit to the historic common, rekindling a rally within the Gulf Coast forwards markets.
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On July 8, information reported by the US Power Info Administration confirmed a 14 Bcf drawdown from stock within the South-Central area through the prior week. The early-July withdrawal was the primary of its form since 2016 and lowered shares to an estimated 991 Bcf, EIA information confirmed. In consequence, the South-Central stock deficit expanded almost 30% on the week, leaving storage ranges 84 Bcf under common.
The bullish indicator for Gulf Coast gasoline demand was seemingly behind a July 8 rebound within the ahead gasoline markets at key downstream hubs throughout the area.
On the benchmark Henry Hub, balance-2021 gasoline costs gained about 9 cents to finish buying and selling at a median $3.71/MMBtu – the best forward-price settlement but recorded in 2021. At Houston Ship Channel, the balance-2021 curve gained nearly 10 cents, additionally settling to its highest value but this 12 months at $3.68/MMBtu, S&P World Platts’ most just lately revealed M2MS information reveals.
Within the money market, costs the Henry Hub and Houston Ship Channel have suffered declines just lately amid milder temperatures in Texas and the Southeast and an accompanying drop in gas-fired energy burn demand. On July 9, nevertheless, costs at each areas rallied to settle close to $3.60 and $3.70/MMBtu, respectively, in accordance with preliminary settlement information from S&P World Platts.
Export demand, provide
Robust gasoline demand within the Southeast and Texas this summer season – adequate to necessitate a drawdown from storage – comes primarily from latest beneficial properties in LNG and pipeline export demand.
From June 1 so far, LNG feedgas delivered to the 4 Gulf Coast LNG terminals, together with Sabine Move, Corpus Christi, Cameron and Freeport, has hovered close to file ranges averaging simply over 9.2 Bcf/d, information from S&P World Platts Analytics reveals. Over the identical five-week interval final summer season, Gulf Coast feedgas demand averaged simply 3.2 Bcf/d amid an onslaught of cargo cancelations from exporters.
The Gulf Coast market’s already tight provide steadiness this summer season has been additional exacerbated by rising pipeline exports to Mexico. For the reason that begin of June, flows southbound from Texas to factors south of the border have averaged almost 5.9 Bcf/d – a roughly 23% enhance in comparison with common exports of 4.8 Bcf/d over the identical interval final summer season.
Stronger export demand has solely been partially offset by this summer season’s enhance in provide. From June 1 so far, whole manufacturing throughout Texas and the Southeast has averaged about 35.8 Bcf/d – up about 1.15 Bcf/d as compared with regional output final summer season. A discount in outflows from Texas, and a lift in inflows to the Southeast has additionally allowed extra that manufacturing to stay inside area. As compared with the June 1-to-date interval final summer season, internet flows throughout Texas and the Southeast are up about 1.7 Bcf/d, information compiled by Platts Analytics reveals.