New England Winter-22 gas tops $ 20 as region faces tight import market

January and February contracts are trading between $ 21 and $ 22 / MMBtu

JKM exceeds $ 32 during September 28 negotiation; TTF settles above $ 27

Everett LNG Terminal Imported 19.2 Bcf, Winter 2020-21

Winter 2022 futures at the city gates of Algonquin are trading at record highs recently as the New England gas market prepares to compete in the global LNG arena for cargoes of high season.

On September 27, Boston area hub futures prices for January and February 2022 climbed to around $ 21 to $ 22 / MMBtu – the highest settlement prices on record for both contracts going back to at least eight years, recently published S&P Global Platts. M2MS data showed.

Since the start of June, winter gas prices at Algonquin have more than doubled from the low area of ​​$ 9 as a persistent shortage of supply in the LNG market has pushed global price indexes to record highs.

On September 28, the benchmark LNG import price in Northeast Asia, Platts JKM, hit a new record high at over $ 32 / MMBtu. At the Dutch TTF hub in Europe, the price of the month fast also hit a record high on September 28, settling north of $ 27 / MMBtu, price data from S&P Global Platts showed.

High global prices could lead to a bullish winter in the New England gas market this year, where limited storage and strained pipelines keep end users dependent on LNG imports on peak winter heating days.

Last season, prices at Algonquin briefly climbed to around $ 11 to $ 12 in January and again in February, but averaged just $ 4.92 and $ 8.37 / MMBtu over the two months. , respectively. In previous winters, Algonquin has experienced similar peaks, sometimes in the range of $ 20 to $ 30, but only for brief periods.

This season, historically tight supply in domestic and global markets could mean sustained price levels close to $ 20, with peak day heating prices potentially rising significantly.

LNG imports

During the winter 2020-2021 heating season, the Everett LNG terminal in New England imported a total of 19.2 billion cubic feet. In the previous winter season, the terminal gained 22.2 billion cubic feet, according to data from S&P Global Platts Analytics.

As is the case every winter, the weather will be the critical factor in determining the total volume of LNG imported into New England and the potential severity of the region’s price spikes this season.

According to a preliminary seasonal forecast from the US National Weather Service, released in mid-September, New England is expected to experience a 40-50% risk of above-average temperatures from December to February, potentially putting a damper on the bull of the region. gas market.

Another factor that could potentially limit price spikes in New England this winter is the change in fuel. During the colder, busiest days of the season, generators across New England frequently sent in fuel oil and coal – production fuels that are typically used sparingly in New England.

During an extreme cold snap in 2018, fuel oil generated over 100,000 MWh in ISO New England on some days, accounting for over 30% of the system’s share of power generation. Coal-fired electricity generated more than 50,000 MWh each winter day, providing up to 15% of the production share, according to data from the New England Independent System Operator.

The combined mild weather and change in fuel could limit the severity of this season’s gasoline price spikes in New England. With the Algonquin spot market already trading at around $ 4 / MMBtu at the end of September, however, it seems likely that the region will face its highest winter price averages in years this season.