US natgas prices turn negative in Texas despite heat wave
By Scott DiSavino
June 25 (Reuters) -U.S. spot natural gas prices in Texas on Tuesday fell below zero for the first time since May as pipe maintenance trapped gas in the Permian Shale even as demand for the fuel soars as consumers crank up their air conditioners to escape a brutal heat wave.
U.S. next-day power and gas prices have turned negative several times so far this year, especially in Texas, Arizona and California.
But negative prices usually come during the spring and autumn when demand for heating and cooling is low - not during a summer heat wave that forces power generators across the country to burn lots of gas to produce electricity to keep air conditioners humming.
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 blamed the latest negative prices, at least in part, on maintenance expected to limit the capacity of U.S. energy company Kinder Morgan's KMI.N 2.7-billion cubic feet per day (bcfd) Permian Highway gas pipe to around 2.5 bcfd on June 25-26.
One billion cubic feet of gas is enough to supply about 5 million U.S. homes for a day.
Traders noted that the small Permian Highway capacity reduction was likely not the only cause of the negative prices.
Permian Highway told customers on June 19 that "due to a necessary repair it will be required to take down a unit at Coyanosa Compressor Station on June 25th and 26th."
Kinder said it expected the pipe to return to full service on June 27.
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 CLc1 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 $1 per million British thermal units (mmBtu) on June 24, down from a positive 22 cents on June 21.
That was the 18th time this year that Waha prices were negative and compares with averages of positive $1.07 so far in June, positive 19 cents in May, positive 86 cents so far this year and positive $1.82 in 2023.
Reporting by Scott DiSavino, Editing by Louise Heavens
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