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Natural gas prices plunge as US set for warmest winter on record

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Natural gas prices plunge as US set for warmest winter on record

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US natural gas prices have plunged to a near-three-decade low as what is set to be the country’s warmest winter on record slashes demand for the heating fuel just as production surges to record levels. 

Winter months, when heating demand is highest, are on track this year to be the mildest since reliable records began in 1950, analysts said, leaving gas usage much lower than expected. 

Coupled with surging US gas production — which hit a record 105bn cubic feet a day in December — that has sent prices into freefall, plummeting by more than 50 per cent since mid-January. 

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On Friday, benchmark Henry Hub contracts for March settled at $1.61 per mn British thermal units, up marginally from $1.58/mn btu on Thursday. Apart from a handful of days in mid-2020 — when the Covid-19 pandemic crushed demand — that is the lowest closing price for the month-ahead contract since 1995.

“It’s just nuts . . . something very unusual is going on,” said Matt Rogers at the Commodity Weather Group, a consultancy. “I hate to use the word devastating — but the floor really fell out on demand expectations.”

Climate change has led to increasingly warm winters across the world. Data released this month showed the average global temperature for the first time breaching the benchmark of 1.5C above pre-industrial levels over a 12-month period. 

That has undermined demand for heating fuel, even as a shift away from coal pushes up the use of gas in electricity.

The number of heating degree days — a measure of coldness based on how often temperatures fall below a certain reference point — has dropped 7 per cent over the past two decades, according to the US Energy Information Administration. 

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The US National Oceanic and Atmospheric Administration, the government agency responsible for mapping weather trends, warned this week that ice cover in the Great Lakes has fallen to a historical low for this time of year.

Based on available data to date, analysts reckon the latest December-to-February winter period will be the warmest since reliable tracking equipment was installed in US airports in the 1950s. CWG estimates it will be 3 per cent warmer than the previous record set in 2015-16, based on gas-weighted heating degree days.

Meanwhile, US gas production, which has surged since the beginning of the shale revolution 15 years ago, has scaled new heights. S&P Global Commodity Insights estimates that production rose to a record of more than 105bn cubic feet per day in December. Output slipped in January before returning to around 105bn cu ft/d again in early February.

“It comes down to weather and record levels of production that we ended up the year with,” said Luke Larsen, director of research at S&P, of the price collapse, noting that gas producers would soon have to throttle back output.

“I think we’re going to probably run into some issues from a production standpoint if we do continue at this level,” he said. “We very well may see production shut-ins.”

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A handful of gas producers indicated plans to curtail drilling programmes in recent days as weak prices put pressure on their profit margins.

Comstock Resources said it would cut its rigs in the field from seven to five and suspend its dividend until prices rise. Antero Resources has cut rig numbers from three to two and slashed its exploration budget. 

EQT, the country’s biggest producer, said it was ready to reduce production as needed this year, depending on how prices move. 

Line chart of Annual dry gas output (tn cubic feet) showing US natural gas production has soared in recent years

“In the short term, we need to be sensitive to the market that we’re in — activity reduction is going to be a big thing,” Toby Rice, EQT chief executive, told analysts this week. 

The gas glut has pushed up inventories, with storage sitting at about 2.54tn cu ft last week, according to the EIA — 11 per cent higher than a year ago and 16 per cent higher than the five-year average.

Sluggish demand has also depressed prices and driven up storage levels in other parts of the world. In Europe, the benchmark Title Transfer Facility (TTF) traded on the Intercontinental Exchange has fallen 22 per cent this year to trade around €25 per megawatt hour, or $7.90 mn btu — less than a tenth of what it was at the peak of the energy crisis in summer 2022.

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The price of liquefied natural gas delivered to north-east Asia, assessed by price reporting agency Argus, has dropped 23 per cent this year, and is trading at levels last seen in 2021.

Traders reckon the supply-demand imbalance will take time to flush out, with options markets suggesting little chance of a significant US price improvement in the near term.

“I think the market has really written off 2024 in terms of any sustained upside rally,” said Charlie Macnamara, head of commodities at US Bank. “You’re starting to see the market really start to formulate an opinion that we need to be down here for a while to help solve this oversupply.”

Additional reporting by Shotaro Tani in London

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Map: 5.1-Magnitude Earthquake Strikes off the Coast of California

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Map: 5.1-Magnitude Earthquake Strikes off the Coast of California

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Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

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A moderately strong, 5.1-magnitude earthquake struck in the North Pacific Ocean on Wednesday, according to the United States Geological Survey.

The temblor happened at 5:45 a.m. Pacific time about 40 miles west of Petrolia, Calif., data from the agency shows.

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As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

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Aftershocks detected

Subsequent quakes have been reported in the same area. Such temblors are typically aftershocks caused by minor adjustments along the portion of a fault that slipped at the time of the initial earthquake.

Quakes and aftershocks within 100 miles

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Aftershocks can occur days, weeks or even years after the first earthquake. These events can be of equal or larger magnitude to the initial earthquake, and they can continue to affect already damaged locations.

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When quakes and aftershocks occurred

 All times are Pacific time. The New York Times

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Sources: United States Geological Survey (epicenter, aftershocks, shake intensity); LandScan via Oak Ridge National Laboratory (population density) | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Wednesday, June 3 at 6:03 a.m. Pacific time. Aftershocks data is as of Wednesday, June 3 at 8:01 a.m. Pacific time.

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California’s primary for governor is undecided as candidates vie to be in the top two

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California’s primary for governor is undecided as candidates vie to be in the top two

Xavier Becerra, Democratic gubernatorial candidate for California, and Steve Hilton, Republican gubernatorial candidate for California, shake hands while arriving for a gubernatorial debate at KRON Studios in San Francisco in April.

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SAN FRANCISCO — The primary election for California governor is too close to call, with vote counting continuing Wednesday. Democrat Xavier Becerra and Republican business executive Steve Hilton lead the field with Democrat Tom Steyer in third place.

In California’s unusual primary system, all candidates, regardless of party, appear on a single ballot open to any registered voter. The top two candidates then move on to the general election, even if they’re from the same party. This year, voters had 60 names for governor to choose from.

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The winner will lead the country’s most populous state, where leaders often take on national political prominence. Incumbent Gov. Gavin Newsom is at his two-term limit and could be a Democratic contender for president.

Becerra, former Health and Human Services secretary under President Joe Biden, pitched himself to voters as an experienced political leader who isn’t afraid of President Trump, but his lead caps one of the most surprising and dramatic comebacks in recent state political history. As recently as April, polls were showing Becerra — also a former member of Congress and California attorney general — languishing in single digits in a crowded field.

In his remarks at his watch party in Los Angeles, Becerra noted his underdog status.

“Here in Hollywood’s hometown, we love a good underdog success story,” he said, drawing parallels between his campaign and his immigrant parents’ success story in California. “Guess what? The underdog stayed in the fight. Like my parents, I never gave up. Never stopped putting one foot in front of the other. Never stopped believing in the beacon-like goodness of California. And thankfully, neither did you.”

Hilton is a former Fox News commentator who also served as a political adviser to former British Prime Minister David Cameron. He was endorsed by President Trump in April, helping him to pull ahead of Riverside County Sheriff Chad Bianco, the other major Republican in the race. Hilton has campaigned on the idea that California needs change after 16 years under total Democratic control.

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The race is narrowing down after a tumultuous campaign

At his watch party in Huntington Beach, the British-born candidate — who became an American citizen five years ago — said it was the “honor of his lifetime” to receive over 1 million votes so far.

“Change is coming to California and it’s long overdue,” Hilton said. “We’re not there yet, but it’s looking good. It looks very much as if Californians really will have the chance to vote for change in November and take our state in a new direction.”

Democratic billionaire activist Steyer spent more than $213 million of his own money to boost his candidacy and push a progressive, populist message. While he was trailing Becerra and Hilton on Tuesday night, he said at his watch party in San Francisco that he remains confident he can close the gap in the days ahead.

“Together, we’ve scared the hell out of the corporate interests used to getting their way,” Steyer said. “It might take some time to figure out where this is going. We’re going to wait until every ballot is counted. We’re gonna give democracy a time to work. And we know we finished really strong.”

The early results are not certain to hold, in part because of unusual voting patterns in this primary election: Ballot-tracking data heading into Tuesday evening showed that Republicans were more likely to vote early by mail, while Democratic voters in this deep-blue state held onto their mail-in ballots or chose to vote in person. That’s the reverse of recent elections, which saw more Democrats voting by mail and Republicans tending to vote in person on Election Day.

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The uncertainty on election night capped a race that remained crowded and unsettled to the end. To some extent, the race was defined by who wasn’t running.

Some of the state’s most high-profile Democrats — former Vice President Kamala Harris, U.S. Sen. Alex Padilla and California Attorney General Rob Bonta — all passed on a potential bid to succeed Newsom.

The race was disrupted in April when then-U.S. Rep. Eric Swalwell’s campaign for governor imploded amid allegations of sexual assault and harassment. Swalwell resigned from Congress shortly after the accusations surfaced and has denied assault allegations.

Swalwell had been gaining in polls and racking up high-profile endorsements, and his exit seemed to primarily benefit Becerra, who had been stuck in single digits in many polls. Ultimately, it quieted fears among Democrats who worried that the messy Democratic field could result in Bianco and Hilton winning the top spots in the June primary.

Marisa Lagos covers California politics at KQED and co-hosts the Political Breakdown show and podcast.

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Supreme Court reinstates Republican-favored Alabama congressional districts

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Supreme Court reinstates Republican-favored Alabama congressional districts

The U.S. Supreme Court

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The Supreme Court on Tuesday cleared the way for Alabama to use a congressional district map favored by Republicans.

The court, in an unsigned order, overturned a three-judge district court panel that found that the map is “tainted by intentional race-based discrimination.” The court’s three liberals publicly dissented.

The ruling means that Alabama’s 2026 midterm elections will feature six Republican-leaning districts and one Democratic-leaning one, as opposed to a map with only five safe Republican seats. Democrat Shomari Figures, who represents Alabama’s Second District, will likely lose his seat as a result of the high court’s ruling.

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The story of Alabama’s congressional map is long and tortured. It began in 2021, when the state implemented a new map to account for population changes in the census. The map featured only one majority-black district out of seven, even though the state is more than one-quarter Black.

Voters immediately sued, claiming the map illegally diluted minority votes in violation of the Voting Rights Act and the Constitution. Lower court judges agreed, ruling that the state must draw a map with two districts where Black voters have a realistic chance of electing their candidate of choice. The Supreme Court more than once has ordered Alabama to draw a compliant map.

But the state has refused and instead continued to litigate the case. On Tuesday, that tactic paid off.

What changed? In April, the Supreme Court’s conservative supermajority all but gutted what remains of the Voting Rights Act, ruling that states cannot purposefully draw districts that are majority-minority.

Alabama then asked the high court to reinstate the state’s old map, under the theory that this new ruling meant that it was permissible to use a map with only one majority-Black district. In an unsigned, unexplained order in May, the high court essentially reversed its previous opinions, and allowed Alabama to use the old map for the upcoming midterm elections.

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This set off a flurry of activity in Alabama. By the time the Supreme Court issued its May order, absentee balloting had already begun, using the court-drawn map. So Republican Governor Kay Ivey cancelled elections and scheduled a special primary for August for the affected congressional races.

The case, however, was not over.

In its ruling, the Supreme Court had ordered a lower court panel to continue evaluating Alabama’s map in light of its recent Voting Rights Act decision. And just 15 days after that order, the panel, composed of three Republican judges—two of them Trump appointees—concluded unanimously that even under the Supreme Court’s new standards, the plan for a single black district was “intentionally discriminatory.”

So, once again, Alabama returned to the Supreme Court, arguing that the map was partisan, not racially discriminatory. In short, that the Republican legislature simply drew the map to elect more Republicans. And that under the Supreme Court’s new interpretation of the Voting Rights Act, the GOP map should be allowed to stand.

The court’s conservative agreed, writing that the lower court “did not heed the presumption of legislative good faith.”

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The court’s three liberals publicly dissented, castigating the conservative majority for failing to abide by its 2006 decision in the case of Purcell v. Gonzalez. That decision declared that courts should not change election rules too close to an election.

Justice Sonia Sotomayor, in her dissent, said the court “debases the democratic process” and “corrodes the rule of law by rewarding Alabama’s gamesmanship and outright defiance of court orders.”

Tuesday’s decision is the latest in a series of Supreme Court rulings that could well reshape the 2026 midterm elections, making it much harder for Democrats to prevail.

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