July bidweek natural gas prices reached some of the lowest levels of the year due to downward pressure in the market following stabilizing production.
The cash price for Houston Ship Channel was at $1.46/MMBtu for the month of July. It is the lowest level since august 1995 and also the lowest level in all of 2020. There was downward pressure on the market as production began to stabilize after seeing falling rig counts.
Permian Basin production sat at 11.17 Bcf on July 1, according to S&P Global Platts Analytics. This came after production for May and June sat at around 10.75 Bcf/d. Production fell below 11 Bcf/d mid-April but has begun to recover.
Looking to the Midwest, Chicago city-gate was at $1.54/MMBtu for July, 6 cents lower than what the location averaged in June. This is the second lowest monthly level the location has reached this year, trading at $1.46/MMBtu for April bidweek. Midwest region faced downward pressure as inventories rapidly fill.
ANR Pipeline's storage in Michigan currently stands at 213 Bcf, 62 Bcf above the five year average. It now stands at 81% of capacity, according to Platts Analytics. Approximately 1 Bcf/d of gas flowing from Western Canada into the Midwest will need to find a new home if inventories fill.
Looking further north, the cash price for Algonquin city-gate changed hands at $1.48/MMBtu for July bidweek. This level is 14 cents higher than what the location was in June. Increased power burn demand in the Northeast added a bullish sentiment in largely bearish market.
Power demand averaged just under 9.1 Bcf/d last month, or nearly 1.2 Bcf/d more than in June 2019, and roughly 25% higher than the average from the last three years, according to Platts Analytics.
