Southeast Premiums Persist as US Natural Gas Market Enters Shoulder Season

As September unfolds, the natural gas market is shifting into shoulder season, characterized by decreasing premiums and discounts that reflect changing demand patterns. Currently, only 22 locations are averaging a premium to Henry Hub at $1.253/MMBtu, while 136 locations are showing an average discount of 51.5 cents. The Southeast is the exception, with several locations still commanding notable premiums.

The Southeast's continued high prices are largely due to lingering heat in the region. FGT Citygate leads the market with a $3.719 average premium to Henry Hub over the period, while Florida Gas Zone 3 averages a premium of $3.010. SoCal Citygate and PG&E Citygate also show notable premiums to the national benchmark.

Appalachian production locations continue to reflect the structural takeaway constraint in the Marcellus and Utica shales, with several locations averaging significant discounts to Henry Hub. Tennessee Zone 4 Marcellus is averaging a discount of $1.457, while Millennium East Pool and Eastern Gas South both average minus $1.327 and minus $1.273, respectively.

As the market moves into shoulder season, demand patterns are shifting, leading to a relatively calm period in natural gas prices. The US natural gas market basis structure is currently self-contained, with 101 locations trading within 50 cents of Henry Hub. This is a predictable outcome for shoulder season by historical standards.