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Natural Gas Weekly Update

for week ending August 17, 2016  |  Release Date:  August 18, 2016  |  Next Release: August 25, 2016

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

In the News:

Asian LNG imports increase in 2016, led by India and China

The first shipment of liquefied natural gas (LNG) through the recently expanded Panama Canal is on its way to Japan, according to Reuters shipping data. This shipment was sourced from the U.S.-based Sabine Pass liquefaction terminal in Louisiana. Asian countries may see increasing volumes of spot shipments from the United States, as more U.S. liquefaction capacity comes online in the next three years, and transit through the expanded Panama Canal reduces shipping costs and travel time between Atlantic and Pacific basins.

Five Asian countries (Japan, South Korea, China, India, and Taiwan) accounted for 68% of global LNG imports in 2015. In the first six months of 2016, in total, these five countries only increased their LNG import volumes by 1% (0.2 billion cubic feet per day (Bcf/d)), compared to the same period last year. However, higher imports in China and India more than offset declines in LNG consumption in the established markets of Japan and South Korea.

China and India, the world’s third and fourth largest LNG importers, together accounting for 14% of global LNG trade in 2015, increased their LNG imports in the first six months of this year, as compared to the same period last year, by 20% and 41%, respectively. In China, the combination of the ramping-up of several LNG supply contracts, including new projects in Australia, and historically low spot LNG prices contributed to higher LNG imports. In India, new government subsidies offered by the Power Supply Development Fund to run natural gas-fired power plants led to higher LNG imports.

In Japan and South Korea—the world’s two largest LNG importers, together accounting for almost half of global LNG trade in 2015—LNG imports have been declining for the past two years. In Japan, average January-June LNG imports in 2016 were 6% lower than in the same period last year and 8% lower than in 2014. Since 2015, Japan has been experiencing lower LNG consumption in the power generation sector. This is primarily a result of lost market share to lower-priced coal generation and increased generation from renewable sources, and the return of two nuclear reactors. Similarly, South Korea’s decrease in LNG imports was driven by higher generation from nuclear and coal units, which is expected to continue in the future. In Taiwan, lower LNG imports this year were driven by the return to service of several coal-fired power plants.

Overview:

(For the Week Ending Wednesday, August 17, 2016)

  • Natural gas spot prices were mixed this report week (Wednesday, August 10, to Wednesday, August 17), but overall price changes were small at most locations. The Henry Hub spot price fell from $2.73 per million British thermal units (MMBtu) last Wednesday to $2.71/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the September 2016 contract rose nearly 6¢, from $2.561/MMBtu last Wednesday to $2.619/MMBtu yesterday.
  • Net injections to working gas totaled 22 Bcf for the week ending August 12. Working gas stocks are 3,339 Bcf, which is 11% greater than the year-ago level and 14% greater than the five-year (2011-15) average for this week.
  • According to Baker Hughes, for the week ending Friday, August 12, the natural gas rig count increased by 2 to 83. The number of oil-directed rigs rose by 15 to 396. The total rig count climbed by 17, and now stands at 481.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 6¢, closing at $4.62/MMBtu for the week ending August 12. The prices of natural gasoline and propane rose by 7% and 1%, respectively. The price of ethane fell by 3%, and the price of butane and isobutane remained flat week over week.

more summary data

Prices/Supply/Demand:

Henry Hub prices fall slightly. This report week (Wednesday, August 10, to Wednesday, August 17), the Henry Hub spot price fell 2¢ from $2.73/MMBtu last Wednesday to $2.71/MMBtu yesterday. Price movements at the Henry Hub were subdued this week; the spot price closed at $2.71/MMBtu for the last three trading days. At the Chicago Citygate prices decreased 3¢ from $2.69/MMBtu last Wednesday to $2.66/MMBtu yesterday. However, prices at PG&E Citygate in California gained 3¢, going from $3.12/MMBtu last Wednesday to $3.15/MMBtu yesterday.

Northeast prices mixed. At the Algonquin Citygate, which serves Boston-area consumers, prices fell 91¢ over the report week. After starting the week last Wednesday at $3.75, Algonquin Citygate prices increased to $6/MMBtu on Monday, likely the result of a force majeure on Algonquin’s pipeline system because of unplanned maintenance, but by Wednesday had fallen back to $2.84/MMBtu. At the Transcontinental Pipeline’s Zone 6 trading point for New York, prices remained unchanged Wednesday to Wednesday at $2.44/MMBtu. New York did not see the same dramatic increase in prices as Boston did; New York prices reached their weekly peak at $2.80/MMBtu on Monday.

Marcellus prices decline. Tennessee Zone 4 Marcellus spot prices fell 4¢ from $1.24/MMBtu last Wednesday to $1.20/MMBtu yesterday. Likewise, prices at Dominion South in northwest Pennsylvania fell 4¢ from $1.32/MMBtu last Wednesday to $1.28/MMBtu yesterday.

Nymex prices increase. At the Nymex, the price of the September 2016 contract increased nearly 6¢, from $2.561/MMBtu last Wednesday to $2.619/MMBtu yesterday. The price of the 12-month strip averaging September 2016 through August 2017 futures contracts climbed 2¢ to $2.963/MMBtu.

Supply increases. According to data from PointLogic, total supply of natural gas increased by 1% over the report week. Dry production remained constant week over week, and average net imports from Canada increased by 3% from last week.

Power burn drives consumption. During the report week, total U.S. consumption of natural gas rose by 1% according to data from PointLogic. Power burn climbed by 4% week over week and industrial consumption stayed constant, averaging 19.4 Bcf/d. Natural gas exports to Mexico were the same as last week, averaging 3.6 Bcf/d.

LNG exports. The natural gas pipeline flows to Sabine Pass liquefaction terminal averaged 1.2 Bcf/d, 37% higher than flows last week, as commissioning activities for liquefaction Train 2 continue. Sabine Pass LNG has filed a request with the Federal Energy Regulatory Commission (FERC) to add fuel gas by August 19 to begin commissioning activities for liquefaction Train 3. Cheniere Energy Inc., the terminal operator, has delayed the startup of Train 3 by two months, now targeting “substantial completion” by June 2017, instead of a previously estimated date of April 2017. In its monthly progress report filed with FERC, the company cited weather-related and other factors as reasons for the delay. The entire Sabine Pass LNG facility will be shut down for several weeks starting in September for maintenance and to address a design problem. One vessel (LNG-carrying capacity 3.4 Bcf) departed Sabine Pass terminal on August 15 and one vessel (LNG-carrying capacity 3.0 Bcf) is currently loading at the terminal.

more price data

Storage:

Injections to storage continue at slower-than-normal rate. Net injections into storage totaled 22 Bcf, compared with the five-year (2011-15) average net injections of 57 Bcf and last year’s net injections of 56 Bcf during the same week. Working gas stocks total 3,339 Bcf, 405 Bcf above the five-year average and 327 Bcf above last year at this time.

This week marks the 15th consecutive week that the gap of working gas stocks compared with the five-year average declined. When the refill season began on April 1, working gas stocks were 874 Bcf above the five-year average.

The South Central region posts a net withdrawal for the fifth straight week. Net withdrawals totaled 12 Bcf in the South Central region, with salt dome facilities accounting for 8 Bcf of the total. This marks the first time that that working gas stocks in the South Central region declined in five successive weeks during the summer months. Withdrawals from storage are on a record-setting pace this year, with net withdrawals from storage in the South Central region occurring more frequently and at larger volumes than ever before. So far in the refill season (April 1-October 31), net withdrawals from storage in that region have occurred in seven different weeks, totaling 77 Bcf, compared with 2012 when net withdrawals totaled 46 Bcf in seven weeks. Nevertheless, working gas stocks in the South Central region remain 22% above the five-year average for this time of year.

Net injections into storage were somewhat bullish compared to market expectations. Estimates of net injections into storage generally ranged from 18 to 30 Bcf, with a median of 26 Bcf. As a result, the price of the Nymex contract for September delivery at the Henry Hub rose 2¢/MMBtu to $2.66/MMBtu, in 1,361 trades at the release of the Weekly Natural Gas Storage Report. Prices continued to rise to $2.67/MMBtu, before declining somewhat in subsequent trading.

Spread to the January futures price decreases on the week. During the most recent storage week, the average natural gas spot price at the Henry Hub was $2.77/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.25/MMBtu, a difference of 49¢/MMBtu. A year ago, the premium was 38¢/MMBtu. The average Henry Hub price so far in the injection season this year, from April 1 to August 11, is $2.34/MMBtu, 15% lower than the average value of $2.76/MMBtu for the same period last year. Earlier during this year’s refill season, the premium exceeded $1/MMBtu.

Temperatures fall from week-ago levels, but remain higher than normal. Temperatures in the Lower 48 states averaged 77°F, 2°F more than the normal and 2°F more than last year at this time. Last week, temperatures reached 78°F on average in the Lower 48 states. Cooling degree-days (CDD) in the Lower 48 states totaled 87, compared with 71 last year and a normal of 72.

more storage data

See also:

Asian LNG imports, January-June year-on-year change, 2016 vs. 2015


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
11-Aug
Fri,
12-Aug
Mon,
15-Aug
Tue,
16-Aug
Wed,
17-Aug
Henry Hub
2.67
2.70
2.71
2.71
2.71
New York
2.74
2.77
2.80
2.73
2.44
Chicago
2.66
2.66
2.67
2.66
2.66
Cal. Comp. Avg.*
2.77
2.89
3.08
2.97
2.86
Futures ($/MMBtu)
September Contract
2.551
2.586
2.59
2.617
2.619
October Contract
2.607
2.626
2.629
2.657
2.659
*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: (8/11/16 - 8/17/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
81.2
80.8
81.4
Dry production
73.0
72.7
73.2
Net Canada imports
6.9
6.7
6.1
LNG pipeline deliveries
0.2
0.2
0.2
Total supply
80.2
79.6
79.4

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline deliveries represent gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas week: Gas Week: (8/11/16 - 8/17/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
63.7
62.9
61.9
    Power
37.9
36.3
34.2
    Industrial
19.4
19.4
19.5
    Residential/commercial
6.4
7.2
8.2
Mexico exports
3.6
3.6
3.2
Pipeline fuel use/losses
6.8
6.7
6.6
LNG pipeline receipts
1.2
0.9
0.0
Total demand
75.3
74.1
71.7

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline receipts represent pipeline deliveries to LNG export terminals.

Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, August 12, 2016
Change from
 
last week
last year
Oil rigs
396
3.9%
-41.1%
Natural gas rigs
83
2.5%
-60.7%
Miscellaneous
2
0.0%
100.0%
Rig numbers by type
Fri, August 12, 2016
Change from
 
last week
last year
Vertical
62
6.9%
-51.2%
Horizontal
375
3.6%
-44.5%
Directional
44
0.0%
-45.7%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-08-12
2016-08-05
change
East
763
746
17
Midwest
861
845
16
Mountain
217
215
2
Pacific
313
314
-1
South Central
1,185
1,197
-12
Total
3,339
3,317
22
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(8/12/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
697
9.5
708
7.8
Midwest
732
17.6
758
13.6
Mountain
178
21.9
170
27.6
Pacific
345
-9.3
328
-4.6
South Central
1,060
11.8
969
22.3
Total
3,012
10.9
2,934
13.8
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Aug 11)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
0
-3
-3
70
28
47
Middle Atlantic
0
-3
-2
77
22
36
E N Central
0
-4
-3
74
21
33
W N Central
1
-2
1
67
2
3
South Atlantic
0
0
0
108
14
13
E S Central
0
0
0
111
19
16
W S Central
0
0
0
146
22
-7
Mountain
0
-3
0
81
9
3
Pacific
1
-1
1
45
-1
-2
United States
0
-2
-1
87
15
16
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Aug 11, 2016

Mean Temperature (F) 7-Day Mean ending Aug 11, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Aug 11, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Aug 11, 2016

Source: NOAA/National Weather Service