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Natural Gas Weekly Update

for week ending June 12, 2019   |  Release date:  June 13, 2019   |  Next release:  June 20, 2019   |   Previous weeks


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

In the News:

Mild weather and record U.S. natural gas production keep prices low despite low storage levels and high exports

On June 6, the price of the Henry Hub natural gas near-month futures contract at the New York Mercantile Exchange (NYMEX) closed at a three-year low of $2.324 per million British thermal units (MMBtu), its lowest price since May 31, 2016. In addition, according to Natural Gas Intelligence, on June 11, the spot price of natural gas at the Henry Hub closed at $2.34/MMBtu, the lowest price since November 17, 2016. For the past month, the daily spot prices of natural gas at most hubs have been lower than the Henry Hub price. With seasonally mild temperatures in some regions of the country, low prices are occurring despite relatively low natural gas inventories and increasing demand for U.S. natural gas exports.

Natural gas storage inventories

For the week ending June 7, working natural gas in underground storage totaled 2,088 billion cubic feet (Bcf), 9.9% lower than the five-year average for this week. Despite the relatively low levels of inventories, the average rate of net injections into storage is 44% higher than the five-year average so far in the refill season, which started in April this year. The injection season started at the lowest storage level since 2014, although storage levels are forecast to start the withdrawal season near the five-year average of 3,730 Bcf of working gas, with forecasts of above-average net injections through October.

U.S. natural gas exports

Since the start of June, natural gas supplied to U.S. liquefied natural gas (LNG) export facilities averaged 5.3 billion cubic feet per day (Bcf/d), 6% lower than in May 2019, according to Point Logic Energy data. In May 2019, natural gas feedstock deliveries to U.S. LNG export terminals were at record-high levels, averaging 5.7 Bcf/d, 65% higher than the 2018 annual average. The United States has seen rapid growth in natural gas exports for the past several years, a trend that has continued into 2019. Exports of LNG for the first three months of 2019 averaged 4.0 Bcf/d, 1.0 Bcf/d higher than the annual average in 2018. Natural gas exports by pipeline from January to March 2019 averaged 8.3 Bcf/d, an increase of 7% from the 2018 annual average. EIA forecasts growth in natural gas exports to continue, with total natural gas gross exports in 2019 averaging 12.4 Bcf/d, 2.5 Bcf/d (25%) higher than in 2018.

The Henry Hub spot price will average $2.77/MMBtu in 2019 and in 2020, 12% lower than the 2018 average of $3.15/MMBtu, according to EIA forecasts. Natural gas spot prices are expected to remain relatively low through 2019 because of continued record growth in U.S. natural gas production. EIA forecasts that U.S. dry natural gas production will average 90.6 Bcf/d in 2019, 8.6% higher than the 2018 daily average production.

Overview:

(For the week ending Wednesday, June 12, 2019)

  • Natural gas spot prices fell at most locations this report week (Wednesday, June 5 to Wednesday, June 12). Henry Hub spot prices fell from $2.39 per million British thermal units (MMBtu) last Wednesday to $2.36/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the July 2019 contract increased 1¢, from $2.378/MMBtu last Wednesday to $2.386/MMBtu yesterday. The price of the 12-month strip averaging July 2019 through June 2020 futures contracts declined 2¢/MMBtu to $2.535/MMBtu.
  • Net injections to working gas totaled 102 billion cubic feet (Bcf) for the week ending June 7. Working natural gas stocks are 2,088 Bcf, which is 10% more than the year-ago level and 10% lower than the five-year (2014–18) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 49¢/MMBtu, averaging $4.32/MMBtu for the week ending June 12. The price of natural gasoline, ethane, propane, butane, and isobutane all fell, by 1%, 17%, 12%, 7%, and 9%, respectively.
  • According to Baker Hughes, for the week ending Tuesday, June 4, the natural gas rig count increased by 2 to 186. The number of oil-directed rigs fell by 11 to 789. The total rig count decreased by 9, and it now stands at 975.

more summary data

Prices/Supply/Demand:

Prices fall at most locations across the country. This report week (Wednesday, June 5 to Wednesday, June 12), Henry Hub spot prices fell 3¢ from $2.39/MMBtu last Wednesday to $2.36/MMBtu yesterday. Temperatures fell somewhat for much of the country week on week, particularly in the Northwest.

Prices in the Rocky Mountain region have been trending much lower than the Henry Hub price since March, but most pricing locations posted substantial increases this report week. Prices at Opal Hub in southwest Wyoming rose 29¢ during the report week to $2.01/MMBtu yesterday. A notable exception was at the Cheyenne Hub, located near Rocky Mountain producers in northeastern Colorado, which fell from $1.66/MMBtu last Wednesday to $1.51/MMBtu yesterday. This drop is likely related to maintenance on a compressor station in northeastern Colorado on the Trailblazer Pipeline, which receives most of Cheyenne’s natural gas.

California prices mixed. Prices at PG&E Citygate in Northern California rose 7¢, up from $2.81/MMBtu last Wednesday to $2.88/MMBtu yesterday. PG&E performed two public safety power shutoffs this past week as part of a wildfire prevention program, temporarily cutting power to nearly 30,000 customers in the region. The PG&E Citygate price dipped on Friday when the shutoffs began, but it returned to earlier levels by the end of the report week. Prices at SoCal Citygate decreased 2¢ from $3.05/MMBtu last Wednesday to $3.03/MMBtu yesterday. The region faces ongoing pipeline constraints, including SoCalGas’s line L235-2, which delivers natural gas into its Northern Zone, estimated to be out of service until July 5.

Northeastern prices experience further declines. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 15¢ from $2.30/MMBtu last Wednesday to $2.15/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 13¢ from $2.24/MMBtu last Wednesday to $2.11/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices decreased 2¢ from $2.02/MMBtu last Wednesday to $2.00/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania fell 6¢ from $2.08/MMBtu last Wednesday to $2.02/MMBtu yesterday.

Permian Basin prices fall this week but remain positive. Prices at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged $0.86/MMBtu last Wednesday, $1.53/MMBtu lower than Henry Hub prices. Yesterday, prices at the Waha Hub averaged $0.45/MMBtu, $1.91/MMBtu lower than Henry Hub prices. Prices at Waha remained in positive territory all week, in contrast to last week, which featured several days of negative trading because of a force majeure on the El Paso Natural Gas Pipeline. The region has had unseasonably mild weather lately and faces ongoing capacity constraints, both of which have put downward pressure on prices.

Supply is flat. According to data from PointLogic Energy, the average total supply of natural gas remained the same as in the previous report week, averaging 93.8 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 1% from last week.

Demand rises slightly with increasing power burn and decreasing demand in other sectors. Total U.S. consumption of natural gas rose by 1% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 4% week over week. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 2%. Natural gas exports to Mexico increased 3%.

U.S. LNG exports increase week over week. Ten LNG vessels (six from Sabine Pass, two from Cove Point, and two from Corpus Christi) with a combined LNG-carrying capacity of 36.0 Bcf departed the United States between June 6 and June 12, according to shipping data compiled by Bloomberg. One vessel was loading at the Sabine Pass terminal on Wednesday.

Kinder Morgan—the developer of the Elba Island liquefaction export terminal near Savannah, Georgia—announced a delay in the start-up of the terminal as a result of unspecified technical issues, according to S&P Global Platts. Elba Island will use 10 small-scale movable modular liquefaction units with a combined capacity of 0.33 Bcf/d.

Storage:

Net injections into storage totaled 102 Bcf for the week ending June 7, compared with the five-year (2014–18) average net injections of 92 Bcf and last year's net injections of 95 Bcf during the same week. Working gas stocks totaled 2,088 Bcf, which is 230 Bcf lower than the five-year average and 189 Bcf more than last year at this time.

According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas stocks ranged from net injections of 99 Bcf to 118 Bcf, with a median estimate of 106 Bcf.

The average rate of net injections into storage is 40% higher than the five-year average so far in the refill season (April through October). If the rate of injections into storage matched the five-year average of 9.4 Bcf/d for the remainder of the refill season, total inventories would be 3,462 Bcf on October 31, which is 230 Bcf lower than the five-year average of 3,692 Bcf for that time of year.

More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.

See also:

Henry Hub historical and projected spot prices, 2016 - 2020


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
06-Jun
Fri,
07-Jun
Mon,
10-Jun
Tue,
11-Jun
Wed,
12-Jun
Henry Hub
2.39
2.35
2.34
2.34
2.36
New York
2.14
2.00
2.18
2.16
2.11
Chicago
2.21
2.12
2.14
2.16
2.18
Cal. Comp. Avg.*
2.00
1.63
2.55
2.64
2.44
Futures ($/MMBtu)
July contract
2.324
2.337
2.357
2.399
2.386
August contract
2.324
2.331
2.350
2.393
2.381
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Sources: Natural Gas Intelligence and CME Group as compiled by Bloomberg, L.P.
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (6/6/19 - 6/12/19)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
99.4
99.7
90.8
Dry production
88.6
88.8
80.7
Net Canada imports
5.1
5.2
5.5
LNG pipeline deliveries
0.1
0.1
0.1
Total supply
93.8
94.1
86.2

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

U.S. natural gas consumption - Gas Week: (6/6/19 - 6/12/19)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
65.6
64.9
59.0
    Power
34.4
33.1
28.5
    Industrial
21.3
21.8
21.5
    Residential/commercial
9.9
10.1
9.0
Mexico exports
5.0
4.9
4.5
Pipeline fuel use/losses
6.1
6.1
5.5
LNG pipeline receipts
5.3
5.3
2.9
Total demand
82.0
81.2
72.0

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
Tue, June 04, 2019
Change from
 
last week
last year
Oil rigs
789
-1.4%
-8.5%
Natural gas rigs
186
1.1%
-6.1%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, June 04, 2019
Change from
 
last week
last year
Vertical
46
-11.5%
-24.6%
Horizontal
855
-0.8%
-8.5%
Directional
74
5.7%
10.4%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2019-06-07
2019-05-31
change
East
440
414
26
Midwest
469
436
33
Mountain
 111
 101
10
Pacific
227
213
14
South Central
842
821
21
Total
2,088
1,986
102
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report
Working gas in underground storage
Historical comparisons
Year ago
(6/7/18)
5-year average
(2014-2018)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
373
18.0
456
-3.5
Midwest
368
27.4
502
-6.6
Mountain
124
-10.5
147
-24.5
Pacific
238
-4.6
270
-15.9
South Central
796
5.8
942
-10.6
Total
1,899
10.0
2,318
-9.9
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report


Temperature – heating & cooling degree days (week ending Jun 06)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
23
-5
-13
6
1
-5
Middle Atlantic
14
-5
-1
16
1
-4
E N Central
17
-7
3
18
-6
-12
W N Central
9
-13
2
40
10
-9
South Atlantic
2
-4
2
81
21
1
E S Central
0
-6
-1
68
15
-6
W S Central
0
-1
0
98
14
-26
Mountain
19
-15
9
37
-1
-18
Pacific
7
-17
-6
14
-2
-1
United States
11
-9
0
43
6
-8
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-day mean ending Jun 06, 2019

Mean Temperature (F) 7-Day Mean ending Jun 06, 2019

Source: National Oceanic and Atmospheric Administration

Deviation between average and normal (°F)

7-day mean ending Jun 06, 2019

Mean Temperature Anomaly (F) 7-Day Mean ending Jun 06, 2019

Source: National Oceanic and Atmospheric Administration