Total demand across California and the Southwest looks to remain elevated throughout the weekend as temperatures in the region continue to trend above average. After reaching as high as 10.7 Bcf/d on gas day 22, total demand in the Southwest will steadily decline to 10.1 Bcf/d by Monday. The ongoing heat wave that will be exiting the region into the weekend set several new records for cash basis. At the SoCal Citygate basis pricing averaged more than $1.10/MMBtu from gas day 20 to 22, exceeding last summer’s highest mark by more than $0.25/MMBtu. Despite the lingering warm weather into the weekend, basis will likely retreat into the weekend as pipeline constraints ease with cooling regional temperatures. Kern River, which saw flows into the Southwest run at above 100% utilization on gas day 20 as a result of high demand in both California and Las Vegas, should begin to see easing capacity constraints and lower basis pressure as demand slides into the weekend.
Midwest inflows from the Rockies have fallen over the last several days as a heatwave that has blanketed the Southwest and driven a surge in power burn is drawing Rockies gas at the expense of the Midwest. Southwest temperatures have averaged 79 degrees Fahrenheit (7 F above normal) over the past four days which has driven power burn to year-to-date highs. This has drawn year-to-date highs of gas from the Rockies, and cut westbound flows to the Midwest by about 0.2 Bcf/d from the previous 30 days to 2.7 Bcf/d. This trend is likely to continue through the weekend, as Southwest temperatures are forecast to cool 2-3 F through Sunday but not return to normal or below normal until Tuesday. Chicago basis has been mostly unaffected by the drop in Rockies supply, and Midwest demand isn’t forecast to pick up until Southwest demand is forecast to fall, meaning Rockies gas should be available when it is needed.
An analysis of Northeast US outflows indicates that, despite strong summer production and falling seasonal demand, regional outflows are down 170 MMcf/d in the April-June period compared with levels seen during Winter 16/17. The points measured in the analysis include outflow constraints on TETCO, Dominion, TCO, Tennessee, REX, and Transco. Perhaps most surprising are declines in deliveries from TCO into TGP at Broad Run and CGT at Leach; sample deliveries from both meters are down a combined 325 MMcf/d this season to date compared with the November-March average. Additionally, backhaul flows on TGP at the Station 200 to Station 204 segment have fallen by about 90 MMcf/d season-over-season, while eastbound flows out of TGP Marcellus through Station 321 have fallen by 225 MMcf/d over the same period, likely as a result of both lower New England demand and reduced capacity on Algonquin at Stony Point. Showing increases among the sampled outflow points are REX east-to-west flows, which have risen by about 300 MMcf/d since the winter, and a 210-MMcf/d increase in southbound flows on Transco on the partial-service startup of Dalton Expansion capacity in April.