Cash prices are clearing U.S. gas inventory backlog and trimming working rigs
August 7, 2024
Key Observations:
There are mounting signs of a slowly tightening U.S. gas balance. The U.S. gas-directed rig count dropped by 3 last week (net) and now stands at 98, according to Baker Hughes. There were 166 rigs working in U.S. basins at the recent cyclical peak nearly two years ago (September 9, 2022).
Five gas-directed rigs were idled across Texas (2), Colorado (1), Louisiana (1), and Pennsylvania (1). Gas-directed rigs were activated in California and Wyoming (one each).
Yesterday the cash price at the Waha Hub flipped back to a positive value ($0.45 per MMBtu) for the first time in eleven days (July 26). This is evidence of incremental clearing of the inventory overhang in the Permian Basin. However, the persistence of other subzero prices in this basin confirms this process is ongoing (see bar chart at right).
The cash gas price at Henry Hub marked at $1.85 per MMBtu last night. Cash prices at the Houston Ship Channel and Katy Hub are also trading on either side of $1.80 per MMBtu. Meanwhile, cash prices in the Marcellus are arbing against $1.25. These prices signal the producing regions are still working to slow the flow rate from current streams.
On the demand side, U.S. consumption ytd has averaged 89.6 Bcf/d for an increase of 3.3 Bcf/d (+3.8%) over the same period a year ago on our estimates. Gas demand growth in the industrial (+13%) and power (+4%) sectors still looks strong.
Source: Baker Hughes, Blacklight Research. Cash prices as of August 6, 2024.
תגובות