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Midcontinent gas prices trend lower on mild weather

05 May 2017 18:20 (+01:00 GMT)
Midcontinent gas prices trend lower on mild weather

Houston, 5 May (Argus) — US midcontinent spot natural gas prices fell during April compared with bid week, and May looks set to follow the same trend.

Spot gas prices at Chicago Citygates in April averaged at $2.95/mmBtu, 2pc lower than the April bid week index. The May bid-week prices at Chicago fell to an average of $2.93/mmBtu.

So far in May spot prices at Chicago have averaged at $2.96/mmBtu amid some cooler weather.

Meanwhile, spot prices in April on Rockies Express pipeline's (Rex) zone 3 averaged at $2.93/mmBtu, falling 3pc from April bid-week. May bid week there averaged $2.96/mmBtu amid pipeline maintenance and some late season heating demand.

ANR pipeline last month reduced northbound capacity in its southeast mainline north of Rex that may have affected flow at the Rex-ANR interconnect near Shelby County, Indiana. The work has been extended through the end of May. Spot gas prices on Rex zone 3 in May is averaging at $2.96/mmBtu.

Rex zone 3 is among the most liquid trading areas of the country since the pipeline's westbound expansions began two years ago, moving gas from shale formations to Illinois, Indiana and Ohio.

Daily traded volumes reported to Argus for Rex zone 3 in April averaged about 578mn cf/d (17mn m³/d), about 6pc lower than in March. Average April volume at the Chicago Citygates fell 13pc month-over-month to about 515mn cf/d.

Temperatures in the midcontinent should be below normal through 18 May, according to the National Weather Service. The agency is predicting average temperatures in the region should be higher than normal in June and July.

June assessments across the midcontinent are valued higher than May bid week prices, according to Argus forward curves.