(Adds analysts' comment in paragraph 6)
May 10 (Reuters) - Spot natural gas prices for Wednesday
at the Waha hub in the Permian Shale in West Texas fell into
negative territory as pipeline maintenance prevented some gas
from leaving the basin and mild spring weather reduced demand
for the fuel.
Next-day power and gas prices fell this week to their lowest
in years in several U.S. regions due to low demand for heating
and cooling, including a record low for power at the SP-15 hub in Southern California.
In Waha , next-day prices for Wednesday
closed at minus 35 cents per million British thermal units
(mmBtu), the first time the contract closed in negative
territory since October 2020, Refinitiv data showed.
Waha prices traded in negative territory in intraday trade
in October 2022 but closed in positive territory as mild autumn
weather kept demand low and pipeline maintenance prevented some
fuel from leaving the basin.
Pipeline companies usually conduct maintenance during the
spring and autumn when demand for gas is lower than during the
summer air conditioning season and the winter heating season.
"As maintenance concludes and demand returns, Waha will
return to its normal price levels," analysts at energy
consulting firm Gelber & Associates said in a note.
Waha prices traded in negative territory several times
in 2019 and 2020 as energy firms pulled record amounts of oil
out of the Permian, the biggest U.S. oil-producing shale basin.
A lot of gas, called associated gas, came out of the ground
with that oil, making the Permian the nation's second-biggest
gas-producing basin behind Appalachia in Pennsylvania, Ohio and
West Virginia.
In the past, energy firms burned some of that gas because
there were not enough pipelines to transport it to market.
But flaring rates dropped in 2021 when several new pipes
entered service, including the 2.0 billion-cubic-feet-per-day
Whistler and Kinder Morgan Inc's 2.1-bcfd Permian
Highway.
Pipeline constraints are showing up again as those pipes
become full and Permian output continues to grow.
Several firms are building new pipes to alleviate that
congestion, including expansions of Whistler and Permian
Highway.
Gas production in the Permian is expected to reach a record
22.5 bcfd in May, up 7% since May 2022, according to federal
energy projections.
(Reporting by Scott DiSavino; Editing by Kirsten Donovan and
Richard Chang)
Messaging: scott.disavino.thomsonreuters.com@reuters.net))
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