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Natural Gas Weekly Update

for week ending May 28, 2014  |  Release Date:  May 29, 2014  |  Next Release: June 5, 2014

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

In the News:

Russian natural gas pipeline exports to Western Europe grow 20%

In 2013, Russia exported an average of 15.6 billion cubic feet per day (Bcf/d) of natural gas on pipelines to countries in Eastern and Western Europe, 16% more than in 2012, according to data from the U.S. Energy Information Administration, Eastern Bloc Research, and Russian Energy Monthly. Russia's natural gas pipeline exports to Western Europe drove most of this increase, rising by 20%, to 12.3 Bcf/d.

The entire increase in Russian natural gas exports to Western Europe in 2013 occurred in three countries – Italy, Germany, and the United Kingdom:

  • Italy had the largest increase in natural gas pipeline imports from Russia in 2013, receiving 2.4 Bcf/d of natural gas. This reflected a 1.0 Bcf/d increase over 2012. Italy accounted for 16% of total Russian natural gas pipeline exports to Eastern and Western Europe in 2013, versus 11% in 2012. Italy can receive Russian natural gas on the Bratstvo (Brotherhood) and Soyuz (Union) pipelines, which pass through Ukraine.
  • Germany saw its natural gas pipeline imports from Russia increase in 2013 to 3.9 Bcf/d. This was 0.7 Bcf/d over 2012 levels. Germany can receive Russian gas on the same pipelines as Italy, as well as the Yamal-Europe and Northern Lights pipelines. However, most of Germany's Russian gas imports now flow via the Nord Stream pipeline, which bypasses transit states, such as Ukraine and Poland, and brings gas directly from Russia via the Baltic Sea.
  • The United Kingdom's natural gas pipeline imports from Russia increased to 1.2 Bcf/d in 2013, 0.4 Bcf/d more than in 2012. The United Kingdom mainly imports natural gas from Russia via the Nord Stream pipeline, along with other interconnecting pipelines.

Currently, Russia's entire natural gas pipeline exports flow to Europe, with the exception of small volumes to Armenia, in Eurasia. However, following several years of negotiations, Russian and Chinese officials agreed last week to a 30-year contract for the construction and operation of the Power of Siberia pipeline, which would initially flow 3.7 Bcf/d of Russian natural gas produced in East Siberia to northern China, with the trade volume eventually reaching 6.4 Bcf/d. However, Russia will continue to export pipeline gas exclusively to Europe and Armenia until the Power of Siberia pipeline begins operating, with official commencement scheduled for late 2017. Since 2009, Russia has also exported less than 1 Bcf per year of liquefied natural gas (LNG) from its Sakhalin Energy LNG plant. LNG exports from Russia could increase with the addition of a third train in Sakhalin between 2017 and 2018, and with completion of the Yamal LNG project.

While Europe imported more natural gas last year from Russia, it imported less natural gas overall. Total natural gas imports into Eastern and Western Europe declined from 43.8 Bcf/d in 2012 to 42.2 Bcf/d in 2013, raising Russia's share from 31% to 37%. The portion of Russian production reaching Eastern and Western Europe on pipelines running through Ukraine also rose, to 19% from 18%. EIA estimates that 16% of all natural gas consumed last year in Europe (including non-European Union countries and Balkan states) flowed from Russia to importing countries on pipelines that passed through Ukraine. Unlike the United States, countries in OECD (Organization for Economic Cooperation and Development) Europe have seen a decrease in natural gas production and consumption since 2005. While this has occurred, OECD Europe has increased its levels of coal consumption.

Overview:

(For the Week Ending Wednesday, May 28, 2014)

  • Natural gas spot price movements were mixed over the report week (Wednesday, May 21, to Wednesday, May 28). The Henry Hub spot price declined 3 cents from $4.57 per million British thermal unit (MMBtu) last Wednesday to $4.54/MMBtu yesterday.
  • At the New York Mercantile Exchange, the July 2014 contract moved into the near-month position and ended the week at $4.615/MMBtu, an increase of $0.137/MMBtu from the previous Wednesday.
  • Working natural gas in storage rose to 1,380 Bcf as of Friday, May 23, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net increase in storage of 114 Bcf for the week resulted in storage levels 35.2% below year-ago levels and 40.1% below the 5-year average.
  • Active oil and natural gas drilling rigs totaled 1,857 as of May 23, down 4 rigs from the previous week, according to data from Baker Hughes Inc. The number of gas rigs declined by 1 to 325, and the number of oil rigs declined by 3 to 1,528. The oil rig count is currently 126 greater than this week last year, and the gas rig count is 29 less than last year's level.
  • After four weeks of declines, the weekly average natural gas plant liquids composite price increased 2.0% from $9.64/MMBtu to $9.84/MMBtu for the week covering May 19 to May 23. The Mont Belvieu spot price of ethane drove the overall increase, rising 3.1%. The spot prices of natural gasoline, butane, isobutane, and propane also increased, rising between 0.7% and 2.7%.

more summary data

Prices/Demand/Supply:

Prices recover from midweek declines. Overall price changes were mixed, with prices generally rising moderately outside of the Gulf of Mexico. In the Gulf region, most prices posted a small net decline. Natural gas prices at most market locations recovered from drops on Friday, when expectations for mild weather over Memorial Day weekend led to price declines. The Henry Hub spot price began the report week at $4.57/MMBtu, settled at $4.38/MMBtu on Friday, but ended the report week at $4.54/MMBtu, for a net decline of $0.03/MMBtu.

Northeast prices reach 20-month lows. In the Northeast, prices on Friday settled at nearly 2-year lows. At Transcontinental Pipeline's Zone 6 trading point for New York City delivery, the spot price dropped to $2.93/MMBtu; at the Algonquin Citygate, which serves Boston, prices fell to $3.09/MMBtu. These were the lowest prices at these locations since September 2012. Prices recovered by the end of the report week; Transco Zone 6 ended the week at $3.40/MMBtu.

June contract expires. The June 2014 contract expired Wednesday at $4.619/MMBtu, having fallen $0.212 during its tenure as the near-month contract. The July 2014 contract rose from $4.478/MMBtu at the beginning of the report week to $4.615/MMBtu yesterday. The 12-month strip (the average of the 12 contracts between June 2014 and May 2015) rose from $4.434/MMBtu last Wednesday to $4.532 yesterday.

Increased production drives supply gains. Overall supply rose 0.2% from the previous week, as production gains offset declines in pipeline imports. Dry gas production averaged 68.0 Bcf/d, which is 0.7% greater than last week and 4.6% greater than the same week last year. Net pipeline imports declined 6.8% from the previous week, but were 6.4% greater than the same week last year. LNG sendout remained at minimal levels.

Demand falls slightly. Total demand declined 0.9% week over week. Consumption of natural gas for power generation increased 16.1%, while residential and commercial consumption declined 20.6%. Total power burn this week was 18.5% greater than the same week last year. Exports to Mexico increased 5.0%.

more price data

Storage

Net storage increase is largest since 2009. The net injection reported for the week ending May 23 was 114 Bcf, 21 Bcf larger than the 5-year average net injection of 93 Bcf and 26 Bcf larger than last year's net injection of 88 Bcf. Working gas inventories totaled 1,380 Bcf, 748 Bcf (35.2%) less than last year at this time, 922 Bcf (40.1%) below the 5-year (2009-13) average, and 680 Bcf (33.0%) below the 5-year observed minimum.

Storage build is larger than market expectations. Market expectations called for a build of 110 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the July natural gas futures contract fell 9 cents to $4.54 /MMBtu on the Nymex. Prices rose 5 cents in the hour following the release.

From the week ending on April 4 to the week ending on May 23, net storage injections have totaled 558 Bcf, versus 428 Bcf for the same seven weeks in 2013, and 488 Bcf for these weeks between 2009 and 2013, on average. The average unit value of what storage holders put into storage from April 4 to May 23 was $4.63/MMBtu, 13% higher than the average value for the same seven weeks last year of $4.09/MMBtu. The highest winter month Nymex price in trading for the week ending on May 23 averaged $4.62/MMBtu. This was 17 cents more than the Nymex June contract price. A year ago, the difference was 31 cents/MMBtu.

There are currently 23 more weeks in the injection season, which traditionally occurs April 1 through October 31, although in many years injections continue into November. In order to reach the EIA's forecasted end-of-October working natural gas inventory level of 3,405 Bcf, an average injection of 88 Bcf per week will need to occur through the end of October. EIA's forecast for the end-of-October inventory levels are below the 5-year (2009-13) minimum value of 3,793 Bcf. To reach the 5-year minimum, average weekly injections through the end of October would need to be 105 Bcf.

Three regions post larger-than-average builds. The East, West, and Producing regions had net injections of 64 Bcf (11 Bcf larger than its 5-year average injection), 19 Bcf (5 Bcf larger than its 5-year average injection), and 31 Bcf (5 Bcf larger than its 5-year average injection), 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 were cooler than normal. Temperatures in the Lower 48 states averaged 62.3 degrees for the week, 1.1 degrees cooler than the 30-year normal temperature and 5.7 degrees cooler than during the same period last year.

Temperatures during the storage report week were cooler than normal. Temperatures in the Lower 48 states averaged 62.3 degrees for the week, 1.1 degrees cooler than the 30-year normal temperature and 5.7 degrees cooler than during the same period last year.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
22-May
Fri,
23-May
Mon,
26-May
Tue,
27-May
Wed,
28-May
Henry Hub
4.47
4.38
Holiday
4.43
4.54
New York
3.18
2.93
Holiday
3.27
3.40
Chicago
4.50
4.39
Holiday
4.51
4.61
Cal. Comp. Avg,*
4.61
4.49
Holiday
4.59
4.71
Futures ($/MMBtu)
June Contract
4.359
4.405
Holiday
4.505
4.619
July Contract
4.357
4.405
Holiday
4.511
4.615
*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: (5/21/14 - 5/28/14)
Percent change for week compared with:
 
last year
last week
Gross Production
4.65%
0.73%
Dry Production
4.61%
0.72%
Canadian Imports
6.45%
-6.81%
      West (Net)
1.66%
-4.00%
      MidWest (Net)
12.63%
-6.78%
      Northeast (Net)
34.06%
36.40%
LNG Imports
-41.87%
-11.43%
Total Supply
4.60%
0.16%
Source: BENTEK Energy LLC
U.S. Consumption - Gas Week: (5/21/14 - 5/28/14)
Percent change for week compared with:
 
last year
last week
U.S. Consumption
2.9%
-1.1%
Power
18.5%
16.1%
Industrial
-0.9%
-1.2%
Residential/Commercial
-11.6%
-20.6%
Total Demand
3.4%
-0.9%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, May 23, 2014
Change from
 
last week
last year
Oil Rigs
1,528
-0.20%
8.99%
Natural Gas Rigs
325
-0.31%
-8.19%
Miscellaneous
4
0.00%
-33.33%
Rig Numbers by Type
Fri, May 23, 2014
Change from
 
last week
last year
Vertical
409
0.74%
-10.50%
Horizontal
1,243
-0.40%
14.35%
Directional
205
-0.97%
-5.96%
Source: Baker Hughes Inc.


Working Gas in Underground Storage
Stocks
billion cubic feet (bcf)
Region
2014-05-23
2014-05-16
change
East
586
522
64
West
250
231
19
Producing
544
513
31
Total
1,380
1,266
114
Source: U.S. Energy Information Administration
Working Gas in Underground Storage
Historical Comparisons
Year ago
(5/23/13)
5-year average
(2009-2013)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
902
-35.0
1,024
-42.8
West
378
-33.9
360
-30.6
Producing
848
-35.8
918
-40.7
Total
2,128
-35.2
2,302
-40.1
Source: U.S. Energy Information Administration


Temperature -- Heating & Cooling Degree Days (week ending May 22)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
44
-10
8
0
-2
-5
Middle Atlantic
44
2
25
1
-5
-17
E N Central
66
18
56
7
-6
-25
W N Central
56
14
32
15
-1
-7
South Atlantic
28
12
26
33
-11
-25
E S Central
31
16
30
27
-7
-31
W S Central
7
4
5
58
-4
-29
Mountain
33
-21
-2
29
6
2
Pacific
21
-13
0
12
4
8
United States
39
4
24
20
-4
-16
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending May 22, 2014

Mean Temperature (F) 7-Day Mean ending May 22, 2014

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending May 22, 2014

Mean Temperature Anomaly (F) 7-Day Mean ending May 22, 2014

Source: NOAA/National Weather Service