Yahoo Finance US natgas prices turn negative in Texas again on pipe maintenance
By Scott DiSavino
May 14 (Reuters) - U.S. spot natural gas prices in Texas averaged below zero for Tuesday for the fourth time this month and the 17th time since March as pipeline maintenance trapped gas in the Permian Shale in West Texas amid low demand for energy.
U.S. next-day power and gas prices have turned negative several times so far this year, especially in Texas, Arizona and California.
Negative prices signal there is too much power or gas being produced in a region. Energy firms can either reduce output, pay someone to take their power or gas, or, if they can get a permit, flare the unwanted gas.
Energy traders have been saying for weeks they expected gas prices at the Waha hub in West Texas to turn negative when U.S. energy company Kinder Morgan started conducting seasonal maintenance on pipelines that move gas from the Permian shale in West Texas to the Gulf Coast.
Kinder Morgan told customers it planned to reduce flows on its Permian Highway Pipeline from May 7-17 and its Gulf Coast Express pipe from May 14-21.
Reductions over the past month or so on those and other pipes in the Permian region have already pushed Waha prices below zero several times over the past few months.
The Permian is the nation's biggest oil producing shale basin. A lot of gas also comes out of the ground along with the oil there.
When oil prices are relatively high, like they have been in recent weeks, producers are willing to take a loss on gas because they can still make lots of money on their oil sales.
Next-day gas prices at the Waha hub fell to negative 73 cents per million British thermal units (mmBtu) on May 13, down from a positive $1.70 on May 10.
That compares with Waha averages of negative 32 cents per mmBtu so far in May, negative 26 cents in April, positive 87 cents so far this year and positive $1.82 in 2023.
The negative gas prices in Texas have also pushed down power prices as shippers who are unable to flow the gas to the Gulf Coast try to move more fuel to the West Coast. That helps cut already low electric prices in California and Arizona because much of that cheap gas is used for power generation.
Power and gas prices are generally low in the spring because mild weather keeps both heating and cooling demand low. On the West Coast, warmer spring weather also melts winter snows in the mountains, boosting the supply of cheap hydropower. (Reporting by Scott DiSavino; Editing by Alison Williams)
