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Natural Gas Weekly Update

for week ending March 6, 2013  |  Release Date:  March 7, 2013  |  Next Release: March 14, 2013

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

In the News:

Japanese LNG import volumes and prices grew more than 10 percent, in 2011 and 2012.

According to Official Statistics of Japan, imports of liquefied natural gas (LNG) rose by 12 percent from 2010 to 2011 and 11 percent from 2011 to 2012. The March 11, 2011 Tohoku earthquake, accompanying tsunami and subsequent nuclear plant outages, have led to higher use of thermal generation, including natural gas fired generation. According to the Federation of Electric Power Companies of Japan, LNG consumed for power generation grew 27 percent from fiscal year (April to March) 2010 to fiscal year 2011. Total LNG imports over the same period grew by a smaller percentage (18 percent) as the destruction from the earthquake limited natural gas demand outside the power sector.

Based on data from Official Statistics of Japan, from 2010 to 2011, the average price for LNG imported to Japan grew 35 percent from US$10.92 per million British thermal units (MMBtu) to US$14.78 per MMBtu. The average import price grew again in 2012, to US$16.62 per MMBtu, or 12 percent over the 2011 average. Most LNG imported to Japan is imported under long-term contracts with the LNG prices explicitly linked to the price of crude oil. However, in order to increase imports since the earthquake, Japanese companies have had to buy more LNG under short-term or spot arrangements, with the prices negotiated between buyers and sellers.

Overview:

(For the Week Ending Wednesday, March 6, 2013)

  • Natural gas prices rose at most trading points during the report week (Wednesday, February 27, to Wednesday, March 6). The Henry Hub spot price ended the week yesterday at $3.57 per MMBtu, up 8 cents from its level the previous week.
  • The front-month (April 2013) New York Mercantile Exchange (NYMEX) contract ended yesterday slightly higher than its value the previous week, at $3.470 per MMBtu, compared to $3.434 per MMBtu last week.
  • Working natural gas in storage declined to 2,083 billion cubic feet (Bcf) as of Friday, March 1, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). An implied storage withdrawal of 146 Bcf for the week moved storage levels 361 Bcf below year-ago levels, and 269 Bcf above the 5-year average.
  • The natural gas rotary rig count declined by 8 to 420 last week, according to data reported by Baker Hughes Incorporated on March 1. The oil rig count rose by 4 to 1,333.

more summary data

Prices:

Natural gas prices rose at most locations, particularly in the Northeast United States. The Henry Hub price rose 8 cents per MMBtu from $3.49 per MMBtu to $3.57 per MMBtu. On Tuesday, at $3.63 per MMBtu, the Henry Hub price was at its highest level since November 28. The general increase in prices was likely the result of a week of winter storms and expectations for frigid weather. While areas in the Midwest received plenty of snow, snowfall was expected to be considerably less in New York and New England.

While New York and New England prices rose, they did not reach the same peaks they reached earlier this year. Already comparatively elevated at $7.76 per MMBtu at the beginning of the report week, the price at the Algonquin Citygate (which serves Boston consumers) dropped in the middle of the week to just under $5 per MMBtu, and rose back to end the week at $7.77 per MMBtu. At Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City, prices rose from $3.85 per MMBtu last Wednesday to $4.66 per MMBtu yesterday. In contrast to this report week, in January 2013 prices at both of these trading points spiked to more than $30 per MMBtu during a cold snap.

Both demand and supply declined this week. According to BENTEK Energy Services LLC (Bentek) data, dry production declined by 0.4 percent from last week, but remains 0.7 percent above levels a year ago. Pipeline imports of natural gas from Canada declined across the board. While LNG sendout increased from the previous week, sendout still remains at minimal levels, averaging 281 MMcf per day. Domestic consumption fell 3.8 percent from last week, with decreases in the residential and commercial, power burn, and industrial sectors. Despite the overall decline in consumption of natural gas for power generation, the Midwest saw large increases beginning Sunday.

At the New York Mercantile Exchange, the April 2013 near-month contract rose slightly from $4.434 per MMBtu last week to $3.470per MMBtu yesterday. While still relatively low, prices are considerably greater than levels last April. The April 2012 contract at this time last year was trading around $2.300 per MMBtu. This week, the 12-month strip (the average of the contracts between April 2013 and March 2014) increased slightly from $3.725 per MMBtu to $3.761 per MMBtu.

more price data

Storage

Working natural gas in storage decreased to 2,083 Bcf as of Friday, March 1, according to EIA's WNGSR. This represents an implied net withdrawal of 146 Bcf from the previous week. This week's net withdrawal was 39 Bcf larger than the 5-year average net withdrawal of 107 Bcf, and 54 Bcf larger than last year's average net withdrawal of 92 Bcf. Inventories are currently 361 Bcf (14.8 percent) less than last year at this time and 269 Bcf (14.8 percent) greater than the 5-year average of 1,814 Bcf.

All three storage regions posted declines this week. Inventories in the East, West, and Producing regions decreased by 77 Bcf (the 5-year average net withdrawal is 79 Bcf), 11 Bcf (the 5-year average net withdrawal is 11 Bcf), and 58 Bcf (the 5-year average net withdrawal is 17 Bcf), respectively. In the Producing region, working natural gas inventories decreased 18 Bcf (8.7 percent) in salt cavern facilities and decreased 40 Bcf (6.0 percent) in nonsalt cavern facilities.

Temperatures during the storage report week were 1.4 degrees cooler than the 30-year normal temperature and 5.3 degrees cooler than the same period last year. Temperatures in the Lower 48 states averaged 38.1 degrees, compared to 43.4 degrees last year and the 30-year normal of 39.6 degrees. While overall temperatures were about a degree cooler than normal, temperatures varied somewhat by Census Division. In the West, the Mountain Census division was particularly cool, averaging 8.4 degrees cooler than the 30-year normal. In the Northeast, the New England Census division was relatively warm, averaging 3.7 degrees warmer than the 30-year normal. Heating degree-days nationwide were 5.5 percent above normal and 23.2 percent above last year.

more storage data

See also:



Natural Gas Spot Prices
Spot Prices ($/MMBtu)
Thu,
28-Feb
Fri,
01-Mar
Mon,
04-Mar
Tue,
05-Mar
Wed,
06-Mar
Henry Hub
3.48
3.54
3.53
3.63
3.57
New York
3.87
3.87
3.87
4.37
4.66
Chicago
3.64
3.65
3.69
3.80
3.78
Cal. Comp. Avg,*
3.62
3.62
3.66
3.75
3.69
Futures ($/MMBtu)
April Contract
3.486
3.456
3.529
3.529
3.470
May Contract
3.531
3.504
3.572
3.575
3.519
*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


U.S. Natural Gas Supply - Gas Week: (2/27/13 - 3/6/13)
Percent change for week compared with:
 
last year
last week
Gross Production
0.72%
-0.41%
Dry Production
0.72%
-0.40%
Canadian Imports
-9.52%
-8.34%
      West (Net)
-14.99%
-3.38%
      MidWest (Net)
42.64%
-8.42%
      Northeast (Net)
-36.35%
-18.08%
LNG Imports
-36.65%
32.91%
Total Supply
-0.31%
-0.90%
Source: BENTEK Energy LLC
U.S. Consumption - Gas Week: (2/27/13 - 3/6/13)
Percent change for week compared with:
 
last year
last week
U.S. Consumption
8.90%
-3.84%
Power
-6.54%
-2.17%
Industrial
1.52%
-1.82%
Residential/Commercial
23.09%
-5.60%
Total Demand
9.11%
-4.02%
Source: BENTEK Energy LLC
Natural Gas Supply


Rigs
Fri, March 01, 2013
Change from
 
last week
last year
Oil Rigs
1,333
0.30%
3.09%
Natural Gas Rigs
420
-1.87%
-39.22%
Miscellaneous
4
0.00%
-20.00%
Rig Numbers by Type
Fri, March 01, 2013
Change from
 
last week
last year
Vertical
431
1.65%
-28.64%
Horizontal
1,141
0.09%
-2.48%
Directional
185
-6.09%
-13.95%
Source: Baker Hughes Inc.


Working Gas in Underground Storage
Stocks
billion cubic feet (bcf)
Region
3/1/13
2/22/13
change
East
922
999
-77
West
344
355
-11
Producing
817
875
-58
Total
2,083
2,229
-146
Source: U.S. Energy Information Administration
Working Gas in Underground Storage
Historical Comparisons
Year ago
(3/1/12)
5-year average
(2008-2012)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
1,123
-17.9
849
8.6
West
354
-2.8
271
26.9
Producing
968
-15.6
694
17.7
Total
2,444
-14.8
1,814
14.8
Source: U.S. Energy Information Administration


Temperature -- Heating & Cooling Degree Days (week ending Feb 28)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
215
-26
21
0
0
0
Middle Atlantic
209
-18
30
0
0
0
E N Central
243
0
28
0
0
0
W N Central
280
37
64
0
0
0
South Atlantic
148
4
45
15
6
1
E S Central
143
5
47
0
-3
-2
W S Central
116
26
54
0
-5
-10
Mountain
242
58
58
0
-1
0
Pacific
114
17
15
0
-1
0
United States
191
10
36
3
0
-1
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Feb 28, 2013

Mean Temperature (F) 7-Day Mean ending Feb 28, 2013

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Feb 28, 2013

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 28, 2013

Source: NOAA/National Weather Service