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Natural Gas Weekly Update

for Week Ending Mar. 28, 2012   |  Release date:  Mar. 29, 2012   |  Next release:  Apr. 5, 2012   |   Previous weeks

JUMP TO: In The News | Overview | Prices | Storage

In the News:

Japan Power Generation Mix and Global LNG Flows.

In the year since the March 2011 earthquake and tsunami that hit Japan and caused the Fukushima nuclear disaster, the country's power generation mix has changed significantly. According to the Federation of Electric Power Companies of Japan (FEPC), recent monthly data for February shows that the capacity factor of Japan's nuclear electricity generation facilities, excluding the Japan Atomic Power Company, was down from last year, with only two reactors active as of March 13. This resulted in a year-over-year decrease of 90.4% in nuclear power generation. The decrease in the amount of electricity generated by nuclear power led to a year-over-year increase of 53.8% in thermal power generation, which includes oil-fired and natural gas-fired generation.

In February 2012, nearly 5 million tons of LNG was consumed by electric power plants, according to FEPG, an increase of over 30% from February 2011. Several major LNG suppliers have increased their deliveries to Japan, as LNG prices have risen substantially, according to BENTEK Energy LLC (Bentek). Among these are Qatar, Nigeria, and Malaysia. The week ending March 23, Japan received cargoes from 12 countries, with the largest volume coming from Qatar.

Overview:

(For the Week Ending Wednesday, March 28, 2012)

  • Reflecting record-warm March temperatures for most of the week, natural gas prices declined at most trading points across the country Colder weather early this week temporarily reversed the trend, with prices increasing across the country on Monday, many by over 10 cents. The Henry Hub spot price closed the report week at $2.04 per million British thermal units (MMBtu) yesterday, down 17 cents for the week.
  • At the New York Mercantile Exchange (NYMEX), the April 2012 natural gas contract began the week at a high of $2.360 per MMBtu and closed the week down 16.9 cents yesterday at $2.191 per MMBtu.
  • Working natural gas in storage rose last week to 2,437 billion cubic feet (Bcf) as of Friday, March 23, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 57 Bcf for the week positioned storage volumes 816 Bcf above year-ago levels.
  • The natural gas rotary rig count, as reported March 23 by Baker Hughes Incorporated, decreased by 11 to 652 active units, marking the 11th straight week of declines. Meanwhile, oil-directed rigs decreased by 4 to 1,313 units.

  • more summary data

    Prices:

    The Henry Hub day-ahead price reversed last week's rebound to decline 17 cents (7.7 percent) over the week. Although there was a temporary halt in the decline on Monday, likely due to the colder weather, the Henry Hub spot price declined overall from $2.21 per MMBtu last Wednesday to $2.04 per MMBtu yesterday. Spot prices at most trading points across the country also increased on Monday, only to subsequently decline for the remainder of the week.

    At the NYMEX, the April 2012 contract, which expired yesterday, declined from $2.360 per MMBtu last Wednesday to $2.191 per MMBtu yesterday, a decline of 16.9 cents (7.2 percent). The 12-Month Strip (average of the April 2012 through March 2013 contracts) also declined, losing 11.4 cents (3.9 percent) over the week to close at $2.809 per MMBtu. The May contract, which moves into the near-month position today, declined from $2.454 per MMBtu last Wednesday to $2.282 per MMBtu yesterday.

    Prices declined at almost all downstream trading locations over the week as warmer-than-normal temperatures were experienced across most of the country. Monday was an exception to the otherwise steady decline, as prices rose generally across the board. Particularly high spot price increases were seen Monday in the Northeast and Southern California, as colder than normal temperatures began moving into these areas. The colder temperatures were short-lived, and prices declined again on Tuesday. Spot prices at the Algonquin Citygate trading point for delivery into Boston, started the week at $2.31 per MMBtu, declined to $2.18 per MMBtu on Friday, jumped to $2.85per MMBtu on Monday, and then fell back to close the report week at $2.59 per MMBtu (up 12.1 percent for the week). Following a similar pattern, the Southern California Border Average price began the week at $2.44 per MMBtu, declined to $2.20 per MMBtu on Friday, jumped to $2.44 per MMBtu on Monday, and subsequently retreated to close yesterday at $2.32 per MMBtu (down 4.9 percent over the week).

    U.S. demand increased over the report week, with overall consumption increasing by over 10 percent on Monday from the previous day in response to the colder weather. Consumption remained elevated on Tuesday before falling off on Wednesday. According to estimates from Bentek,U.S. natural gas consumption increased by 2.4 percent from last week. The residential/commercial sector showed the highest increase, with a 10.4 percent gain over the report week. The industrial sector gained 1.3 percent, while the power sector posted a 3.2 percent decline.

    Increases in dry gas production, imports, LNG sendout, contributed to an increase in total supply. According to Bentek estimates, the week's natural gas supply showed a 0.7 percent increase from last week's level. Domestic dry gas production remained relatively level over the week, posting a 0.2 percent increase over the previous week and is 4.9 percent above this time last year. The increase in this week's natural gas supply was augmented by a 6.5 percent increase in imports from Canada and, although volumetrically small, a 20.1 percent increase in LNG imports. Imports from Canada are 16.5 percent below year-ago volumes for the same week, and LNG imports are 41.9 percent below year-ago levels.

    more price data

    Storage

    Working natural gas in storage increased to 2,437 Bcf as of Friday, March 23, according to EIA's WNGSR. This represents an increase of 57 Bcf from the previous week. The implied net injection for the same week last year was 7 Bcf, while on average over the last 5 years there were implied net injections of 8 Bcf. Inventories in both the East and Producing Regions posted increases of 25 Bcf (a 2.4 percent increase from the previous week's level) and 34 Bcf (a 3.5 percent increase), respectively. Stocks in the West Region posted a slight decline of 2 Bcf.

    Stocks were 900 Bcf (58.6 percent) higher than the 5-year average level of 1,537 Bcf and 816 Bcf (50.3 percent) higher than last year at this time. Inventories in both the Producing and East Regions are over 60 percent above their 5-year average, by 392 Bcf and 403 Bcf, respectively. The West Region inventories are also above their 5-year averages by 104 Bcf (43.3 percent).

    Beginning with the report period for the week ending March 16, 2012, the WNGSR has provided new breakouts for inventory levels at salt cavern and nonsalt cavern facilities in the Producing Region. Working gas stocks in the Producing Region, for the week ending March 23, 2012, totaled 1,019 Bcf, with 249 Bcf in salt cavern facilities and 770 Bcf in nonsalt cavern facilities. Working gas stocks increased 17 Bcf in the salt cavern facilities and increased 18 Bcf in the nonsalt cavern facilities, since March 16. An historical series of the salt and nonsalt subtotals of the Producing Region, dating back to January 7, 2011, is available for download at: wngsr_producing_region_salt.xls. This new breakout of regional natural gas stocks should help analysts assess more comprehensively the relationship between inventory changes and types of storage facilities.

    Temperatures during the week ending March 22 were 14.1 degrees warmer than the 30-year normal temperature and 8.9 degrees warmer than the same period last year. The average temperature nationwide during this period was the warmest in March in the last 5 years according to data from the National Oceanic and Atmospheric Administration. During the week all regions with the exception of the Pacific Region in the West were warmer than normal. The East North Central and the West North Central Regions in the Midwest were particularly warm, averaging 26.9 and 22.6 degrees warmer than normal, respectively. The average temperature in the Pacific Region in the West was cool, averaging 3.4 degrees cooler than normal. Heating degree-days nationwide were down 64.5 percent from normal and 53.3 percent from last year.

    more storage data



    See also:

Liquefied natural gas consumed by Japanese electric sector

million tons

Source: The Federation of Electric Power Companies of Japan



Natural Gas Spot Prices
Spot Prices ($/MMBtu)
Thu,
22-Mar
Fri,
23-Mar
Mon,
26-Mar
Tue,
27-Mar
Wed,
28-Mar
Henry Hub
2.19
2.07
2.17
2.09
2.04
New York
2.28
2.15
2.36
2.25
2.21
Chicago
2.19
2.13
2.19
2.08
2.05
Cal. Comp. Avg,*
2.40
2.26
2.38
2.27
2.23
Futures ($/MMBtu)
April Contract
2.269
2.275
2.226
2.208
2.191
May Contract
2.372
2.373
2.319
2.294
2.282
*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: (3/21/12 - 3/28/12)
Percent change for week compared with:
 
last year
last week
Gross Production
4.40%
0.20%
Dry Production
4.90%
0.20%
Canadian Imports
-16.50%
6.50%
      West (Net)
-1.70%
-4.90%
      MidWest (Net)
19.70%
14.60%
      Northeast (Net)
-64.90%
40.30%
LNG Imports
-41.90%
20.10%
Total Supply
2.50%
0.70%
Source: BENTEK Energy LLC
U.S. Consumption - Gas Week: (3/21/12 - 3/28/12)
Percent change for week compared with:
 
last year
last week
U.S. Consumption
-15.00%
2.40%
Power
32.80%
-3.20%
Industrial
-5.30%
1.30%
Residential/Commercial
-42.90%
10.40%
Total Demand
-14.80%
2.30%
Source: BENTEK Energy LLC
Natural Gas Supply


Weekly natural gas rig count and spot Henry Hub

active rigs$ per MMBtu

Source: Baker Hughes

Rigs
Fri, March 23, 2012
Change from
 
last week
last year
Oil Rigs
1,313
-0.30%
54.29%
Natural Gas Rigs
652
-1.66%
-25.91%
Miscellaneous
3
-25.00%
-57.14%
Rig Numbers by Type
Fri, March 23, 2012
Change from
 
last week
last year
Vertical
563
-2.26%
8.48%
Horizontal
1,174
-0.51%
17.99%
Directional
231
1.32%
3.13%
Source: Baker Hughes Inc.


Working Gas in Underground Storage
Stocks
billion cubic feet (bcf)
Region
3/23/12
3/16/12
change
East
1,074
1,049
25
West
344
346
-2
Producing
1,019
985
34
Total
2,437
2,380
57
Source: U.S. Energy Information Administration
Working Gas in Underground Storage
Historical Comparisons
Year ago
(3/23/11)
5-year average
(2007-2011)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
668
60.8
1,383
-22.3
West
216
59.3
380
-9.5
Producing
740
37.7
908
12.2
Total
1,624
50.1
2,671
-8.8
Source: U.S. Energy Information Administration


Temperature -- Heating & Cooling Degree Days (week ending Mar 22)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
80
-114
-92
0
0
0
Middle Atlantic
53
-126
-94
0
0
0
E N Central
15
-172
-115
16
16
16
W N Central
35
-151
-91
8
7
8
South Atlantic
17
-87
-37
26
14
11
E S Central
8
-90
-19
26
21
19
W S Central
18
-40
11
32
19
-8
Mountain
137
-15
9
1
-1
-1
Pacific
110
23
-11
0
-1
0
United States
50
-91
-57
13
8
5
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Mar 22, 2012

Mean Temperature (F) 7-Day Mean ending Mar 22, 2012

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Mar 22, 2012

Mean Temperature Anomaly (F) 7-Day Mean ending Mar 22, 2012

Source: NOAA/National Weather Service

Monthly dry shale gas production

billion cubic feet per day

Source: Lippman Consulting, Inc. Gross withdrawal estimates are as of February 2012 and converted to dry production estimates with EIA-calculated average.