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Natural Gas Weekly Update

for week ending April 16, 2014  |  Release Date:  April 17 2014  |  Next Release: April 24, 2014

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JUMP TO: In The News | Overview | Prices/Demand/Supply | Storage

In the News:

Northeastern prices drop below national benchmark

As temperatures warmed and natural gas heating demand declines, northeastern and Mid-Atlantic prices dropped below the national benchmark Henry Hub spot price on several days since the end of March. This is a reversal of price movements of the past several months, when Boston and New York prices frequently rose far above the national benchmark. In January, for example, New York prices at Transcontinental Pipeline's Zone 6 (Transco Z6 NY) trading point averaged $30.39 per million British thermal units (MMBtu), compared to $4.70/MMBtu at the Henry Hub.

The spot price at Transco Z6 NY, which has been trading below the Henry Hub spot price for most of April, fell to $3.57/MMBtu on Friday, April 11, $1.08/MMBtu less than the Henry Hub closing price of $4.65 that day. Other northeastern and Mid-Atlantic prices similarly fell; Tetco M-3 closed at $3.79/MMBtu and the Algonquin Citygate price averaged $4.08/MMBtu. The warm weather and decline in heating demand played a role in declining prices; on Saturday, residential and commercial natural gas heating demand was at its lowest level since October, according to Bentek Energy data. Pipeline flows of natural gas from Canada into the Northeast also dropped to six-month lows, according to Bentek data.

While Northeast and Mid-Atlantic prices fell heading into the weekend, the Henry Hub price (and other spot prices in the Gulf of Mexico region) rose slightly. Some trade press reports attributed this to warm weather in the region and increased cooling demand, as maximum temperatures reached into the 80s and even 90s in the Gulf region.

Historically, prices in the Northeast have traded at a premium to the Henry Hub, especially in times of high demand in the winter. However, in summer and fall of 2013, northeastern prices regularly began dropping below the national benchmark, possibly the result of increasing Marcellus supplies in the region.

Expectations for unseasonably cold weather on Tuesday and Wednesday boosted northeastern and Mid-Atlantic prices back above the Henry Hub.

Overview:

(For the Week Ending Wednesday, April 16, 2014)

  • Although the Henry Hub spot price fell slightly from $4.66/MMBtu last Wednesday, April 9, to $4.62/MMBtu yesterday, natural gas spot prices rose somewhat at most market locations this week.
  • At the New York Mercantile Exchange (Nymex), the price of the near-month futures contract fell slightly from $4.586/MMBtu last Wednesday to $4.530/MMBtu yesterday.
  • Working natural gas in storage rose to 850 billion cubic feet (Bcf) as of Friday, April 11, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net storage injection of 24 Bcf for the week resulted in storage levels 50.0% below year-ago levels and 54.3% below the 5-year average.
  • Active oil and natural gas drilling rigs totaled 1,831 as of April 11, an increase of 13 from the previous week, according to data from Baker Hughes Inc. The natural gas rig count decreased by 6 rigs to 310, while the number of oil-directed rigs rose by 19 from 1,498 to 1,517.
  • The weekly average natural gas plant liquids composite price increased for the third week in a row. The composite price rose this week (covering April 7 through April 11) by 2.6%, and is now at $10.20/MMBtu. All five of the components of the composite price increased this week. Natural gasoline increased by 2.7%; ethane, 3.2%; propane, 3.2%; butane, 0.9%; and isobutane, 1.6%.

more summary data

Prices/Demand/Supply:

Outside of the Southeast, prices at most market locations rise. Henry Hub spot prices fell slightly from $4.66/MMBtu last Wednesday to $4.62/MMBtu yesterday, while other pricing points in the Southeast moved similarly. However, at most other locations around the country, overall price changes were small, with more small net gains than small net losses for the report week.

Northeast prices fall during warm weather, then rise. In the Northeast, prices had fallen below the Henry Hub spot price in many trading locations over the weekend. However, with unseasonably cool weather beginning Tuesday, April 15, prices went back up to end the week at a premium to the Henry Hub. At the Algonquin Citygate, which serves Boston consumers, prices traded at a $0.57/MMBtu discount to the Henry Hub on Friday. On Tuesday, prices at Algonquin Citygate were at a $2.10/MMBtu premium to the Henry Hub. The Northeast price increases were less pronounced outside of New England; at Transco Zone 6 NY, prices ended Tuesday at $4.75/MMBtu, an 8-cent premium to the Henry Hub. The Algonquin Citygate and Transco Zone 6 NY prices ended the report week on Wednesday at $5.55/MMBtu and $4.53/MMBtu, respectively.

Nymex declines slightly. The price of the near-month (May 2014) contract at the Nymex fell from $4.586/MMBtu last Wednesday to $4.530/MMBtu yesterday. The price of the 12-month strip (the 12 contracts between May 2014 and April 2015) fell from $4.650/MMBtu last Wednesday to $4.598/MMBtu yesterday.

Increased production boosts supply. According to Bentek data, overall supply rose 0.2% this week. This increase was largely due to a 0.3% increase in dry production week over week. Bentek noted that dry production of 68.0 Bcf on Sunday was an all-time record high. Pipeline imports of natural gas from Canada fell by 1.6% week over week, with declines in imports in the West and Northeast offsetting gains in the Midwest. LNG sendout declined slightly, but has been a minimal part of the supply picture for some time now.

Consumption falls. Decreases in residential and commercial consumption drove an overall 3.9% decline in U.S. demand. Residential and commercial consumption fell 10.5% as heating demand subsided. Consumption of gas for power generation rose 3.1%, likely the result of increased air-conditioning demand in the parts of the South that experienced summer-like weather over the weekend. Industrial consumption fell by 1.8% and exports to Mexico rose 3.6%.

more price data

Storage

Smaller-than-average injection accompanies mild weather. The net injection reported for the week ending April 11 was 24 Bcf, 13 Bcf smaller than the 5-year average net injection of 37 Bcf and 1 Bcf smaller than last year's net injection of 25 Bcf. Working gas inventories totaled 850 Bcf, 850 Bcf (50.0%) less than last year at this time, 1,010 Bcf (54.3%) below the 5-year (2009-13) average, and 777 Bcf (47.8%) below the 5-year observed minimum.

For the second straight week, storage build is lower than market expectations. Market expectations called for a build of 35 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the May natural gas futures contract rose 17 cents to $4.69/MMBtu on the Nymex. Prices rose another 1 cent in the hour following the release.

Only the West region posts a larger-than-average build. The East, West, and Producing regions had net injections of 6 Bcf (12 Bcf smaller than its 5-year average injection of 18 Bcf), 8 Bcf (5 Bcf larger than its 5-year average injection of 3 Bcf), and 10 Bcf (7 Bcf smaller than its 5-year average injection of 17 Bcf), respectively. Storage levels for all three regions remain below their year-ago and 5-year average levels, and their 5-year minimums.

Temperatures during the storage report week warmer than normal. Temperatures in the Lower 48 states averaged 51.7 degrees for the week, 1.1 degrees warmer than the 30-year normal temperature and 1.3 degrees cooler than during the same period last year.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
10-Apr
Fri,
11-Apr
Mon,
14-Apr
Tue,
15-Apr
Wed,
16-Apr
Henry Hub
4.57
4.65
4.63
4.67
4.62
New York
4.22
3.57
4.30
4.75
4.53
Chicago
4.61
4.73
4.87
4.90
4.80
Cal. Comp. Avg,*
4.79
4.81
4.77
4.81
4.78
Futures ($/MMBtu)
May Contract
4.655
4.620
4.560
4.567
4.530
June Contract
4.671
4.635
4.582
4.587
4.549
*Avg. of NGI's reported prices for: Malin, PG&E citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index
Natural gas futures prices
Natural gas liquids spot prices


U.S. Natural Gas Supply - Gas Week: (4/2/14 - 4/9/14)
Percent change for week compared with:
 
last year
last week
Gross Production
4.83%
0.29%
Dry Production
4.79%
0.29%
Canadian Imports
-14.84%
-1.61%
      West (Net)
-8.12%
-2.86%
      MidWest (Net)
-27.98%
6.95%
      Northeast (Net)
189.79%
-34.54%
LNG Imports
-41.70%
-1.86%
Total Supply
3.26%
0.17%
Source: BENTEK Energy LLC
U.S. Consumption - Gas Week: (4/2/14 - 4/9/14)
Percent change for week compared with:
 
last year
last week
U.S. Consumption
-3.5%
-3.9%
Power
-6.0%
3.1%
Industrial
0.5%
-1.8%
Residential/Commercial
-4.9%
-10.5%
Total Demand
-3.2%
-3.7%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, April 11, 2014
Change from
 
last week
last year
Oil Rigs
1,517
1.27%
9.37%
Natural Gas Rigs
310
-1.90%
-17.77%
Miscellaneous
4
0.00%
-42.86%
Rig Numbers by Type
Fri, April 11, 2014
Change from
 
last week
last year
Vertical
391
-0.51%
-15.55%
Horizontal
1,224
0.00%
11.07%
Directional
216
7.46%
4.85%
Source: Baker Hughes Inc.


Working Gas in Underground Storage
Stocks
billion cubic feet (bcf)
Region
2014-04-11
2014-04-04
change
East
311
305
6
West
168
160
8
Producing
371
361
10
Total
850
826
24
Source: U.S. Energy Information Administration
Working Gas in Underground Storage
Historical Comparisons
Year ago
(4/11/13)
5-year average
(2008-2012)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
662
-53.0
771
-59.7
West
336
-50.0
300
-44.0
Producing
701
-47.1
789
-53.0
Total
1,700
-50.0
1,860
-54.3
Source: U.S. Energy Information Administration


Temperature -- Heating & Cooling Degree Days (week ending Apr 10)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
148
-4
15
0
0
0
Middle Atlantic
139
3
31
0
0
-2
E N Central
137
-3
15
0
0
0
W N Central
132
-1
0
0
-1
-1
South Atlantic
66
-4
1
19
6
-2
E S Central
66
1
14
1
-4
-11
W S Central
47
15
8
9
-7
-14
Mountain
105
-21
-11
7
1
0
Pacific
42
-32
-14
4
2
4
United States
99
-6
7
6
2
-2
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Apr 10, 2014

Mean Temperature (F) 7-Day Mean ending Apr 10, 2014

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Apr 10, 2014

Mean Temperature Anomaly (F) 7-Day Mean ending Apr 10, 2014

Source: NOAA/National Weather Service