U.S. Energy Information Administration - EIA - Independent Statistics and Analysis

Natural Gas

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Natural Gas Weekly Update

for week ending June 4, 2014 | Release date: June 5, 2014 | Next release: June 12, 2014 | Previous weeks

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

In the News:

High natural gas storage levels help keep European prices low

Since mid-February, natural gas storage levels in Europe have been higher than normal and well above last year's unusually low levels. This spring, liquefied natural gas (LNG) imports are also on the rise, as high inventories in Asia push spot LNG cargoes into Europe. As a result, natural gas prices at the end of May at the U.K.'s National Balancing Point (NBP) trading hub were near their lowest levels since late 2010.

European storage levels heading into the 2013-14 winter were low after the unusually cold weather last March and early April, but storage in most parts of Europe had recovered to normal levels by the beginning of 2014. As the United States experienced an unusually cold winter, which led to record U.S. storage withdrawals, an unusually warm winter in much of Europe resulted in high storage levels entering the spring season. Austria reported its second-warmest winter on record in 247 years. Germany, the largest consumer of natural gas in Europe, reported its fourth- warmest winter on record since 1881. The United Kingdom experienced its fifth-warmest winter since 1981 (the earliest date in the relevant data series), and it was the wettest winter in England and Wales since 1766.

As a result, natural gas storage in Europe at the end of March (generally considered the end of the withdrawal season) was 45% full out of a total working gas storage capacity of approximately 2,700 billion cubic feet (Bcf), compared to 24% full at the end of March in 2013 and 40% full on average for the end-of-March tally in 2010-12. High storage levels have persisted through spring with European storage at the end of May 60% full, versus 33% full at the end of May in 2013 and 56% full on average for the end of May in 2010-12. In contrast, due to the unusually cold winter in the United States, storage was 18% full at the end of March and 30% full at the end of May.

Alongside the robust storage levels, natural gas imports in Europe are also putting downward pressure on prices. Pipeline natural gas imports from Russia to Europe have continued without interruption. Additionally, mild weather in Asia and high LNG stocks there are pushing more spot LNG cargoes with flexible scheduling into Europe. In May, 10 LNG cargoes from Qatar arrived in the United Kingdom, the most in the past year, and over the last 2 weeks of May, NBP generally traded near or below $7.50 per million British thermal units (MMBtu), a sustained low not seen since late 2010.

Overview:

(For the Week Ending Wednesday, June 4, 2014)

Natural gas spot prices decreased slightly yesterday, but ended slightly higher for the report week (Wednesday, May 28, to Wednesday, June 4). The Henry Hub spot price averaged $4.57/MMBtu yesterday, an increase of 3 cents/MMBtu over last Wednesday's $4.54/MMBtu average.
At the New York Mercantile Exchange, the July 2014 contract moved into the near-month position last Thursday. It increased by 13.5 cents/MMBtu for the report week, from $4.615/MMBtu last Wednesday to $4.640/MMBtu yesterday.
Working natural gas in storage rose to 1,499 Bcf as of Friday, May 30, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net increase in storage of 119 billion cubic feet (Bcf) for the week resulted in storage levels 33.0% below year-ago levels and 37.4% below the 5-year average.
The Baker Hughes active rig count totaled 1,866 as of May 30, up 9 rigs from the previous week. The number of active natural gas-directed rigs increased by 1, to 326. The number of active oil-directed rigs increased by 8, to 1,536. A decline of 5 oil-directed rigs in the Williston Basin in North Dakota and Montana, which includes the Bakken Shale play, partially offset a 13-rig increase in the rest of the United States, including an increase of 4 oil-directed rigs in the Permian Basin in Texas and New Mexico. The oil-directed rig count is currently 126 greater than this week last year, and the natural gas-directed rig count is 28 less than this week last year.
The Mont Belvieu natural gas plant liquids composite price increased for the second week in a row, averaging $9.93/MMBtu for the week covering May 26 to May 30, and is 0.6% higher than the previous week's average. Spot prices for ethane, butane, and isobutane all increased for the second week in a row, by 1.1%, 1.0%, and 4.0%, respectively. The spot price of propane was relatively flat over the prior week, while the spot price for natural gasoline decreased by 0.6%.

more summary data

Prices/Demand/Supply:

Prices increase for the past week. The Henry Hub natural gas spot price began the report week on Wednesday, May 28 at $4.54/MMBtu, and traded up to $4.57/MMBtu yesterday, as temperatures warmed. Since mid-May, natural gas spot prices have generally risen with warmer temperatures, as consumption for electric power generation (power burn) has increasingly driven natural gas prices. Power burn has exceeded residential and commercial natural gas consumption since May 19. A key factor has been rising demand for air conditioning as the weather warmed.

Prices at the Henry Hub traded up to $4.61/MMBtu on Thursday, May 29, likely in anticipation of temperatures climbing into the 60s and 70s the next day in most of the country. Henry Hub then declined on Friday, May 30, to $4.49/MMBtu, with temperatures remaining relatively flat over the weekend. Prices rose to $4.53/MMBtu on Monday, June 2, and $4.59 on Tuesday, June 3, as temperatures again warmed, before declining slightly yesterday.

New England prices show volatility. Prices at major U.S. natural gas hubs generally followed the same pattern as the Henry Hub spot price, except in New England. The natural gas spot price at the Algonquin Citygate, which serves Boston, began the report week on Wednesday, May 28 at $4.21/MMBtu, having increased significantly from the 20-month low of $3.09/MMBtu on Monday, May 26. This price increase happened as the average daily temperature in Boston dropped to below 50 degrees Fahrenheit at the start of the report week, indicating that higher residential and commercial consumption is likely still influencing New England prices.

As Boston temperatures rose through Friday, the Algonquin Citygate spot price decreased to $3.56/MMBtu, alongside a decrease in residential and commercial consumption. However, the Algonquin Citygate spot price increased on Monday and Tuesday, and averaged $5.26/MMBtu yesterday, when temperatures dropped back into the 50s. This reflected a $1.05/MMBtu increase for the report week, and was $0.69/MMBtu more than the Henry Hub spot price. It was significantly higher than yesterday's average spot prices at the Transco Zone 6-New York hub and Tetco-M3 mid-Atlantic hub, both of which were more than $1/MMBtu below Henry Hub.

July futures contract price increases. The July 2014 natural gas futures contract on the New York Mercantile Exchange (Nymex) began the report week last Wednesday at $4.615/MMBtu. With expectations of warmer temperatures on Thursday, the July contract decreased by 5.6 cents/MMBtu, taking over as the front-month contract. The July contract decreased slightly on Friday, but then increased on Monday, Tuesday, and yesterday, when it closed at $4.640/MMBtu. The 12-month strip (the average of the 12 contracts between July 2014 and June 2015) was essentially flat over the report week, closing at $4.530/MMBtu yesterday.

Production and supply decrease slightly. Overall supply decreased by 0.2 Bcf/d, or 0.3%, from the previous week, to 72.8 Bcf/d. Dry natural gas production also decreased by 0.2 Bcf/d, to 67.8 Bcf/d, 0.4% less than the prior report week's record dry production average of 68.0 Bcf/d. Pipeline imports from Canada and liquefied natural gas (LNG) sendout remained flat.

Consumption continues to decrease. Total U.S. natural gas consumption declined for the fifth week in a row, by 0.4 Bcf/d, or 0.7%, to 56.7 Bcf/d, despite increasing power burn. This was the second consecutive report week, and fourth out of the last five, in which power burn increased, but total consumption decreased. Particularly large power burn increases in Texas and the Southwest exceeded declines in the Southeast. However, this only partially offset a decrease in demand from the residential, commercial, and industrial sectors.

Mexican exports continue to rise. For the third report week in a row, natural gas pipeline exports from the United States to Mexico reached a record, rising 5% to 2.3 Bcf/d. This was also the third consecutive report week that the United States exported an average of more than 2.0 Bcf/d to Mexico, which had not occurred for any previous report week. Export volumes from border crossings in California and Arizona rose by 21% over last week, to 0.5 Bcf/d. The volumetric increase was five times more than the increase in export volumes from Texas border crossings, which rose 1% to 1.8 Bcf/d. Bentek data indicate that exports increased significantly at border crossings in Douglas, Arizona, and Ogilby Mesa, California. Mexican energy ministry SENER projects a significant rise in natural gas imported via pipeline from the United States in coming years, driven largely by consumption growth from Mexico's natural gas-fired power plants.

more price data

Storage

Weekly net storage increase is the fifth largest in EIA records. The net injection reported for the week ending May 30 was 119 Bcf, 26 Bcf larger than the 5-year average net injection of 93 Bcf and 11 Bcf larger than last year's net injection of 108 Bcf. Working gas inventories totaled 1,499 Bcf, 737 Bcf (33.0%) less than last year at this time, 896 Bcf (37.4%) below the 5-year (2009-13) average, and 642 Bcf (30.0%) below the 5-year observed minimum.

Storage build is larger than market expectations. Market expectations called for a build of 116 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the July natural gas futures contract fell 7 cents to $4.59 /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 30, net storage injections have totaled 677 Bcf, versus 536 Bcf for the same seven weeks in 2013, and 581 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 30 was $4.60/MMBtu, 12% higher than the average value for the same seven weeks last year of $4.10/MMBtu. The highest winter-month Nymex price (for next January) in trading for the week ending on May 30 averaged $4.62/MMBtu. This was 13 cents more than the current Nymex July contract price. A year ago, the difference was 28 cents/MMBtu.

There are currently 22 more weeks in the injection season, which traditionally occurs April 1 through October 31, although in many years injections continue into November. EIA forecasts that the end-of-October working natural gas inventory level will be 3,405 Bcf, which, as of May 30, would require an average injection of 87 Bcf per week through the end of October. EIA's forecast for the end-of-October inventory levels are below the 5-year (2009-13) average value of 3,837 Bcf. To reach the 5-year average, average weekly injections through the end of October would need to be 106 Bcf.

Three regions post larger-than-average builds. The East, West, and Producing regions had net injections of 69 Bcf (15 Bcf larger than its 5-year average injection), 19 Bcf (4 Bcf larger than its 5-year average injection), and 31 Bcf (7 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.

Temperatures during the storage report week were warmer than normal. Temperatures in the Lower 48 states averaged 68.4 degrees for the week, 3.0 degrees warmer than the 30-year normal temperature and 4.9 degrees warmer than during the same period last year.

more storage data

Spot Prices ($/MMBtu)	Thu, 29-May	Fri, 30-May	Mon, 02-Jun	Tue, 03-Jun	Wed, 04-Jun
Henry Hub	4.61	4.49	4.53	4.59	4.57
New York	3.37	3.27	3.26	3.67	3.44
Chicago	4.61	4.52	4.63	4.74	4.72
Cal. Comp. Avg,*	4.80	4.68	4.81	4.90	4.86
Futures ($/MMBtu)
July Contract	4.559	4.542	4.612	4.629	4.640
August Contract	4.540	4.524	4.598	4.616	4.540
*Avg. of NGI's reported prices for: Malin, PG&E citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index

U.S. Natural Gas Supply - Gas Week: (5/28/14 - 6/4/14)
	Percent change for week compared with:
	last year	last week
Gross Production	4.37%	-0.35%
Dry Production	4.33%	-0.35%
Canadian Imports	-7.28%	0.07%
West (Net)	-6.92%	-0.80%
MidWest (Net)	5.28%	-7.18%
Northeast (Net)	-97.06%	-104.91%
LNG Imports	-64.22%	1.52%
Total Supply	3.16%	-0.32%
Source: BENTEK Energy LLC

U.S. Consumption - Gas Week: (5/28/14 - 6/4/14)
	Percent change for week compared with:
	last year	last week
U.S. Consumption	-0.9%	-0.7%
Power	-2.7%	4.1%
Industrial	-0.7%	-1.6%
Residential/Commercial	2.2%	-7.4%
Total Demand	-0.3%	-0.5%
Source: BENTEK Energy LLC

Rigs
	Fri, May 30, 2014	Change from
	Fri, May 30, 2014	last week	last year
Oil Rigs	1,536	0.52%	8.94%
Natural Gas Rigs	326	0.31%	-7.91%
Miscellaneous	4	0.00%	-42.86%

Rig Numbers by Type
	Fri, May 30, 2014	Change from
	Fri, May 30, 2014	last week	last year
Vertical	403	-1.47%	-10.44%
Horizontal	1,251	0.64%	14.88%
Directional	212	3.41%	-8.62%
Source: Baker Hughes Inc.

Working Gas in Underground Storage
	Stocks billion cubic feet (bcf)
Region	2014-05-30	2014-05-23	change
East	655	586	69
West	269	250	19
Producing	575	544	31
Total	1,499	1,380	119
Source: U.S. Energy Information Administration

Working Gas in Underground Storage
	Historical Comparisons
	Year ago (5/30/13)		5-year average (2009-2013)
Region	Stocks (Bcf)	% change	Stocks (Bcf)	% change
East	960	-31.8	1,078	-39.2
West	394	-31.7	375	-28.3
Producing	883	-34.9	942	-39.0
Total	2,236	-33.0	2,395	-37.4
Source: U.S. Energy Information Administration

Temperature -- Heating & Cooling Degree Days (week ending May 29)
		HDD deviation from:			CDD deviation from:
Region	HDD Current	normal	last year	CDD Current	normal	last year
New England	50	10	-6	2	-1	2
Middle Atlantic	24	-6	-27	11	1	3
E N Central	17	-19	-43	21	3	12
W N Central	5	-26	-31	39	16	21
South Atlantic	4	-7	-16	68	17	21
E S Central	0	-10	-11	61	18	19
W S Central	0	-1	-1	70	-1	-16
Mountain	21	-23	-5	38	8	8
Pacific	8	-21	-25	18	7	17
United States	13	-14	-24	37	7	10
Note: HDD = heating degree-day; CDD = cooling degree-day Source: National Oceanic and Atmospheric Administration