Natural Gas

Overview:

(For the Week Ending Wednesday, April 2, 2014)

• Spot prices fell at most market locations during the report week (Wednesday, March 26, to Wednesday, April 2). The Henry Hub spot price fell from $4.42/MMBtu last Wednesday to $4.35/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the May 2014 contract decreased slightly from $4.395/MMBtu at the beginning of the report week to $4.364/MMBtu yesterday.
• Working natural gas in storage fell to 822 billion cubic feet (Bcf) as of Friday, March 28, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net storage withdrawal of 74 Bcf for the week resulted in storage levels 51.6% below year-ago levels and 54.7% below the 5-year average.
• The total rig count was 1,809 as of March 28, according to data from Baker Hughes Inc., an increase of 6 from the previous week. The natural gas rotary rig count totaled 318, which represents a decrease of 8 rigs from the previous week and a decrease of 71 units from the same time last year. Oil rigs rose for the seventh week in a row, by 14 units to 1,487, which is 133 greater than last year at this time.
• The weekly average natural gas plant liquids composite price, after seven weeks of declines, increased this week (covering March 24 through March 28) by 0.7%, and is now at $9.92/MMBtu. This is still more than $2.75/MMBtu less than at the end of January, when the composite price was $12.69/MMBtu. Butane and isobutane prices increased by 1.0% and 1.2%, respectively, and natural gasoline prices rose 0.8%. Propane prices increased by 0.7%, while the price of ethane increased by 0.2%.

more summary data

Prices/Demand/Supply:

Henry Hub price falls. The Henry Hub spot price declined to $4.35/MMBtu this week, despite snow falling across much of the Midwest and Northeast in the last days of March. Price patterns were similar in most other parts of the country, as temperatures toward the end of the report week finally seem to be moderating after a winter characterized by frigid temperatures and near record-breaking snowfalls in several major cities.

Northeast prices increase Monday, following significant declines last Thursday. Spot prices in the Northeast closed lower at most major trading hubs this Wednesday versus last Wednesday. The natural gas spot price at the Algonquin Citygate hub serving Boston-area consumers fell by $2.08/MMBtu last Thursday, but then rose $1.26/MMBtu on Monday as temperatures fluctuated over the week. It closed yesterday at $5.17/MMBtu, down $1.91/MMBtu from last Wednesday. Spot prices at other Northeast hubs followed a similar pattern, but with generally more moderate price movements from day to day and from Wednesday to Wednesday.

Nymex prices decrease slightly. The Nymex May contract, which became the near-month contract on Friday, opened the report week at $4.395/MMBtu last Wednesday and settled yesterday at $4.364/MMBtu. The 12-month strip (the 12 contracts between May 2014 and April 2014) fell slightly from $4.502/MMBtu last Wednesday to $4.454/MMBtu yesterday.

Consumption decreases week over week. Total consumption decreased 15.8% week over week, as temperatures moderated, with decreases occurring in all sectors. The largest decline was in the residential and commercial sectors, which primarily use natural gas for heating. Residential and commercial consumption declined 25.6% this week. Consumption of natural gas for power generation decreased 10.5%, and industrial consumption declined 2.5%.

Decreased U.S. net imports push down total supply. Total supply decreased 0.4% this week, according to data from Bentek Energy. Natural gas dry production in the United States increased for the fourth week in a row, by 0.4%, to 67.2 Bcf/d. However, the 0.2 Bcf/d increase in U.S. dry production this week only partially offset a 0.5 Bcf/d (11.9%) decrease in net natural gas pipeline imports from Canada. Imports into the Northeast, Midwest, and West all decreased, with the largest decline seen in the Northeast where net imports from Canada fell 0.3 Bcf/d (38.9%). Net natural gas pipeline imports from Canada into the Midwest and West each fell 0.1 Bcf/d (6.5% and 4.8%, respectively).

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Storage

Cooler weather brings a larger-than-average net withdrawal. The net withdrawal reported for the week ending March 28 was 74 Bcf, 66 Bcf larger than the 5-year average net withdrawal of 8 Bcf but 21 Bcf smaller than last year's net withdrawal of 95 Bcf. Working gas inventories totaled 822 Bcf, 878 Bcf (51.6%) less than last year at this time, 992 Bcf (54.7%) below the 5-year (2009-13) average, and 783 Bcf (48.8%) below the 5-year minimum.

Storage draw is the same as market expectations of 74 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the April natural gas futures contract fell 2 cents to $4.38/MMBtu on the Nymex. Prices rose 1 cent in the hour following the release.

All three regions posted larger-than-average withdrawal. The East, West, and Producing regions had net withdrawals of 46 Bcf (29 Bcf larger than its 5-year average withdrawal of 17 Bcf), 4 Bcf (compared with its 5-year average injection of 1 Bcf), and 24 Bcf (compared with its 5-year average injection of 8 Bcf), 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 cooler than normal. Temperatures in the Lower 48 states averaged 41.3 degrees for the week, 5.7 degrees cooler than the 30-year normal temperature, but 1.3 degrees warmer than during the same period last year.

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See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook