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Natural Gas Weekly Update

for week ending January 17, 2018   |  Release date:  January 18, 2018   |  Next release:  January 25, 2018   |   Previous weeks


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

In the News:

EIA estimates that December 2017 U.S. natural gas production set a new record

EIA’s Short-Term Energy Outlook (STEO), released January 9, 2018, estimates that U.S. dry natural gas production averaged a record-high 78.1 billion cubic feet per day (Bcf/d) during December 2017, topping the previous estimated record set the month before when dry U.S. production averaged 77.3 Bcf/d. STEO forecasts that dry U.S. natural gas production will average 73.6 Bcf/d in 2017, or 0.7 Bcf/d (1%) higher than 2016 average production of 72.9 Bcf/d. STEO’s forecast 2017 production is still lower than the record annual average U.S. natural gas production of 74.2 Bcf/d in 2015.

Before November 2017, the record monthly dry natural gas production occurred in April 2015, averaging 75.2 Bcf/d. Average monthly production fell by more than 4.0 Bcf/d from April 2015 to December 2016. However, STEO estimates 11 out of 12 months in 2017 had month-on-month increases in natural gas production, culminating in the record levels seen in November and December.

Several factors supported higher levels of dry natural gas production in 2017. Total natural gas demand was higher in the last three months of 2017 than during the same period in 2016, in part because of higher levels of pipeline and liquefied natural gas (LNG) exports. Pipeline exports to Mexico increased by 0.4 Bcf/d (9%) in the last three months of 2017 compared to the same period in 2016, while LNG exports increased by 1.9 Bcf/d (176%).

In addition, continued buildout of takeaway capacity, especially in the significant production areas of the Northeast, allowed for production increases in some established producing areas. Natural gas pipeline projects (including reversals, expansions, and new pipelines) with capacity totaling more than 9.3 Bcf/d were completed in 2017, of which more than 4.0 Bcf/d begins in Pennsylvania.

The STEO is forecasting an annual 9% increase in U.S. dry production from 2017 to 2018 and another 3% increase from 2018 to 2019 as pipeline capacity and exports continue to increase.

Overview:

(For the Week Ending Wednesday, January 17, 2018)

  • Natural gas spot prices rose at most locations this report week (Wednesday, January 10 to Wednesday, January 17). The Henry Hub spot price rose from $3.11 per million British thermal units (MMBtu) last Wednesday to $3.87/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the February 2018 contract price rose 33¢ from $2.906/MMBtu last Wednesday to $3.232/MMBtu yesterday.
  • Net withdrawals from working gas totaled 183 Bcf for the week ending January 12. Working natural gas stocks are 2,584 Bcf, which is 12% less than the year-ago level and 12% lower than the five-year (2013–17) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 5¢, averaging $8.31/MMBtu for the week ending January 17. The price of propane fell by 4%. The price of ethane, butane, and isobutane rose by 9%, 6%, and 3%, respectively. The price of natural gasoline remained flat week over week.
  • According to Baker Hughes, for the week ending Tuesday, January 9, the natural gas rig count increased by 5 to 187. The number of oil-directed rigs rose by 10 to 752. The total rig count increased by 15, and it now stands at 939.

more summary data

Prices/Supply/Demand:

Prices rise across the country with cold temperatures east of the Rockies. This report week (Wednesday, January 10 to Wednesday, January 17), spot prices rose across the country as cold weather affected the eastern half of the United States. Spot prices at most locations reached weekly highs on Tuesday. The Henry Hub spot price rose 76¢ from $3.11/MMBtu last Wednesday to $3.87/MMBtu yesterday, and reached a weekly high of $5.09/MMBtu on Tuesday. At the Chicago Citygate, prices increased 29¢ from $3.03/MMBtu last Wednesday to $3.32/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 12¢, up from $2.87/MMBtu last Wednesday to $2.99/MMBtu yesterday. The price at SoCal Citygate increased 47¢ from $3.14/MMBtu last Wednesday to $3.61/MMBtu yesterday, with a peak of $4.37/MMBtu on Tuesday.

Texas reports peak winter electricity consumption. The Electric Reliability Council of Texas (ERCOT) reported that historic low temperatures resulted in a new winter peak electricity consumption record of 65,731 megawatts on January 17, likely leading to relatively high winter natural gas consumption because natural gas-fired power represents half of the state’s electricity generation portfolio. Natural gas spot prices—notably in East and South Texas—reached weekly highs on January 16.

Northeast prices rise over the weekend and end the week up. At the Algonquin Citygate, which serves Boston-area consumers, prices went up $9.32 from $4.48/MMBtu last Wednesday to $13.80/MMBtu yesterday, reaching a weekly high of $15.16/MMBtu on Friday with increased demand resulting from colder temperatures. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased $6.04 from $3.22/MMBtu last Wednesday to $9.26/MMBtu yesterday, reaching a weekly high of $17.90/MMBtu on Friday.

Tennessee Zone 4 Marcellus spot prices increased 33¢ from $2.54/MMBtu last Wednesday to $2.87/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 23¢ from $2.69/MMBtu last Wednesday to $2.92/MMBtu yesterday.

Futures prices rise to an eight-month high. At the Nymex, the price of the February 2018 contract increased 33¢, from $2.906/MMBtu last Wednesday to $3.232/MMBtu yesterday. Wednesday’s intraday high of $3.28 is the highest a front-month contract has traded since May 2017 according to Bloomberg data. The price of the 12-month strip, averaging February 2018 through January 2019 futures contracts, climbed 10¢ to $2.933/MMBtu. The CME Group announced that Henry Hub natural gas futures reached a record-high daily trading volume on January 12 of 1,022,858 contracts, surpassing the 1 million milestone for the first time.

Supply rises slightly. According to data from PointLogic Energy, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week.

Demand is flat. Total U.S. consumption of natural gas was unchanged from the previous report week, averaging 102.3 Bcf/d according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 6% week over week. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption declined by 4%. Natural gas exports to Mexico increased 3%.

U.S. LNG exports increase week over week. Five LNG vessels (LNG-carrying capacity 17.2 Bcf combined) departed the Sabine Pass liquefaction facility last week (Thursday to Wednesday) and one tanker (LNG-carrying capacity 3.8 Bcf) was loading at the terminal on Wednesday.

more price data

Storage:

Weekly withdrawal levels are lower than the five-year average for the first time in three weeks. Net withdrawals from storage totaled 183 Bcf for the week ending January 12, compared with the five-year (2013–17) average net withdrawal of 203 Bcf and last year's net withdrawals of 230 Bcf during the same week. Working gas stocks totaled 2,584 Bcf, which is 362 Bcf less than the five-year average and 368 Bcf less than last year at this time.

Warming temperatures ease natural gas consumption during the storage week. Declines in natural gas consumption occurred in all market sectors during the storage week, according to PointLogic Energy. Declines totaled 167 Bcf, with residential/commercial consumption posting the largest declines during the week, falling 122 Bcf (27%) from the previous week’s record level. Consumption in the power and industrial sectors declined 29 Bcf (15%) and 16 Bcf (9%), respectively.

The February 2018 futures contract trades at a discount to the current spot price. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.00/MMBtu, 9¢ higher than the front-month futures price at the Nymex. A year ago, the spot price was 2¢ higher than the front-month contract. This pricing pattern provided economic incentives to withdraw natural gas from storage to avoid exposure to the spot market.

Reported net implied flows out of storage are near the lower end of analysts’ expectations, and prices on the Nymex fell following the release of the Weekly Natural Gas Storage Report. According to the Bloomberg survey of natural gas analysts, estimates of the weekly net change in working natural gas storage ranged from 180 Bcf to 212 Bcf, with a median of 199 Bcf. Prices for the futures contract for February delivery fell about 4¢/MMBtu, averaging $3.15/MMBtu, at the release of the Weekly Natural Gas Storage Report, with 1,423 contracts traded. Prices remained close to this level in subsequent trading.

Temperatures are warmer on the week and remain colder than normal in the Northeast. Temperatures in the Lower 48 states averaged 34 degrees Fahrenheit (°F), 1°F higher than the normal and 4°F higher than last year at this time. Temperatures in the heavy natural gas-consuming areas of the Northeast were also significantly warmer than the previous week. Despite warming somewhat, temperatures in the Northeast remained colder than normal—averaging lower than 25°F during the week, about 6°F lower than normal.

more storage data

See also:

Monthly average dry natural gas production


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
11-Jan
Fri,
12-Jan
Mon,
15-Jan
Tue,
16-Jan
Wed,
17-Jan
Henry Hub 3.24 4.00 Holiday 5.09 3.87
New York 3.21 17.90 Holiday 13.48 9.26
Chicago 3.24 3.99 Holiday 3.91 3.32
Cal. Comp. Avg.* 2.83 2.94 Holiday 3.21 2.96
Futures ($/MMBtu)
February Contract 3.084 3.200 Holiday 3.129 3.232
March Contract 2.925 2.993 Holiday 2.962 3.024
*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: (1/11/18 - 1/17/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
85.0
84.6
78.4
Dry production
75.7
75.4
70.0
Net Canada imports
6.5
6.2
5.8
LNG pipeline deliveries
0.5
0.8
0.2
Total supply
82.7
82.3
76.0

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: (1/11/18 - 1/17/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
102.3
102.6
81.0
    Power
28.3
26.7
21.4
    Industrial
24.3
24.0
22.3
    Residential/commercial
49.7
51.8
37.2
Mexico exports
4.2
4.1
3.8
Pipeline fuel use/losses
8.0
8.0
6.3
LNG pipeline receipts
2.9
2.3
1.8
Total demand
117.4
117.0
93.0

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, January 12, 2018
Change from
 
last week
last year
Oil rigs
752
1.3%
44.1%
Natural gas rigs
187
2.7%
37.5%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, January 12, 2018
Change from
 
last week
last year
Vertical
62
0.0%
-1.6%
Horizontal
805
0.9%
49.9%
Directional
72
12.5%
22.0%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-01-12
2018-01-05
change
East
614
664
-50
Midwest
717
778
-61
Mountain
158
167
-9
Pacific
244
251
-7
South Central
851
907
-56
Total
2,584
2,767
-183
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(1/12/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
647
-5.1
683
-10.1
Midwest
805
-10.9
786
-8.8
Mountain
185
-14.6
169
-6.5
Pacific
250
-2.4
276
-11.6
South Central
1,064
-20.0
1,032
-17.5
Total
2,952
-12.5
2,946
-12.3
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Jan 11)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
317
45
24
0
0
0
Middle Atlantic
308
48
21
0
0
0
E N Central
286
-9
-36
0
0
0
W N Central
283
-34
-65
0
0
0
South Atlantic
219
37
-4
5
-3
1
E S Central
188
-1
-35
0
-2
0
W S Central
105
-36
-50
0
-3
-4
Mountain
170
-66
-69
0
0
0
Pacific
84
-39
-39
0
0
0
United States
217
-8
-29
1
-1
0
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Jan 11, 2018

Mean Temperature (F) 7-Day Mean ending Jan 11, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Jan 11, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Jan 11, 2018

Source: NOAA National Weather Service