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‹ See the most recent Natural Gas Weekly Update

Natural Gas Weekly Update

for week ending December 18, 2015   |  Release date:  December 17, 2015   |  Next release:  January 7, 2016   |   Previous weeks

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

In the News:

Natural Gas Prices at 16-Year Low

Natural gas spot prices hit a 16-year low this week, with the Henry Hub spot price settling at $1.65 per million British thermal units (MMBtu) on Tuesday, December 15. Futures prices also settled at their lowest level since March 1999, with the near-month contract settling at $1.790/MMBtu on Wednesday.

Although the January contract only fell below $2/MMBtu this week, prices have been relatively low for several months. Strong production growth and ample storage inventories have contributed to the recent low-price environment; production hit three consecutive records in July, August, and September of this year. Storage inventories topped out at 4,009 billion cubic feet (Bcf) the week ending November 20, 2015.

Warmer-than-normal temperatures since the beginning of November, the start of the heating season, have contributed to lower inventory withdrawals. From October 30 through December 11, storage inventories fell by 85 Bcf. This drop compares to the five-year average decline over this period of 258 Bcf, and to a decline of 253 Bcf last year over this period. In addition to strong production growth and robust inventories, forecasts for a continued warmer-than-normal winter also have contributed to the relatively low futures prices.

The last time the Henry Hub spot price remained below $2/MMBtu for a sustained period of time was in April 2012. After a warm winter, inventories were at their highest level headed into the injection season. High inventories, combined with production growth at the time, resulted in an average price of $1.95/MMBtu for the month of April 2012. Much of the surplus of natural gas at the end of the winter heating season was used by the electric power sector during the summer.

Overview:

(For the Week Ending Wednesday, December 16, 2015)

  • Natural gas prices are down again at most trading locations for the report week (Wednesday, December 9, through Wednesday, December 16). The Henry Hub spot price began the week at $2.00/MMBtu last Wednesday and ended at $1.68/MMBtu yesterday. Prices have not been this low since March 1999.
  • At the New York Mercantile Exchange (Nymex), the January Nymex price began at $2.062/MMBtu last Wednesday and settled at $1.790/MMBtu yesterday.
  • Working natural gas in storage decreased by 34 Bcf, declining to 3,846 Bcf as of Friday, December 11. The net withdrawal from storage resulted in storage levels 16% above a year ago and 9% above the five-year (2010–14) average for this week.
  • The total oil and natural gas rig count fell by 28 units this week, with 709 units in service for the week ending Friday, December 11, according to data from Baker Hughes Incorporated. This is the lowest combined oil and natural rig count since September 1999. The oil rig count drove the decline, decreasing by 21 units to 524, and the natural gas rig count decreased by 7 units to 185 units.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, decreased by 6.2% to $4.56/MMBtu for the week ending Friday, December 11. Natural gas liquids spot prices fell across the board; ethane fell by 7.4%, propane fell by 5.2%, butane fell by 8.9%, isobutane fell by 9.8%, and natural gasoline fell by 3.3%.

more summary data

Prices/Demand/Supply:

Henry Hub price hits 16-year low. As described in last week's Natural Gas Weekly Update, the Henry Hub price has recently dipped below $2.00/MMBtu on warm weather, growing supply, and high levels of underground stocks. This week, the price descent continued as the Henry Hub price reached a 16-year low of $1.65/MMBtu on Tuesday, and closed at $1.68/MMBtu yesterday. In much of the eastern half of the country, weather for the report period was very mild, exceeding the week's normal average temperatures by 16° or more.

Spot prices down at most trading locations on mild weather. Prices at the Chicago Citygate began the report week at $2.04/MMBtu and closed the week down at $1.85/MMBtu. The PG&E Citygate price in Northern California fell from $2.57/MMBtu last Wednesday to $2.44/MMBtu yesterday.

Prices remain low in Northeastern locations. New England prices decreased with warmer weather in the region, particularly late last week and over the weekend. Transco Zone 6 NY, serving New York City, fell from $1.77/MMBtu last Wednesday to $1.48/MMBtu yesterday, and hit an intra-week low of 90¢/MMBtu on Friday. Tennessee's Zone 4 Marcellus trading point followed a similar pattern; prices began at $1.07/MMBtu last Wednesday and fell to $1.04/MMBtu yesterday, hitting an intra-week low of 65¢/MMBtu on Friday. The Algonquin Citygate price, in Boston, increased slightly for the week, beginning at $1.82/MMBtu last Wednesday and closing at $1.88/MMBtu yesterday. As with other regional prices, the Algonquin price dipped on Friday, closing at $1.07/MMBtu. This is the second-lowest the Algonquin price has ever reached; the all-time low was $0.82/MMBtu on July 2, 2015.

Weather in the Rockies, by contrast, was notably colder for the report period. Prices in the Rockies and the Pacific Northwest generally trended flat or up. The Malin price in southern Oregon increased from $2.11/MMBtu last Wednesday to $2.20/MMBtu yesterday. The Opal price in southwest Wyoming increased from $1.96/MMBtu to $2.13/MMBtu.

Nymex prices down. At the Nymex, the January contract began at $2.062/MMBtu last Wednesday and ended the report week down over 27¢, closing at $1.790/MMBtu yesterday. The 12-month strip, which averages the January 2015 through December 2016 Nymex prices, closed at $2.184/MMBtu yesterday, 16¢ lower than last week.

Leak at Southern California Gas Co's Aliso Canyon field ongoing. A leak at Southern California Gas Company's Aliso Canyon field is releasing large volumes of natural gas. The company is drilling a relief well and is taking measures to mitigate the leak, but it is expected to take several months for the relief well to be completed.

Supply decreases slightly. According to data from Bentek Energy, natural gas supply this week decreased, driven by a small decline in dry production, and a more substantial decline in U.S. imports of natural gas from Canada. Dry natural gas production fell by 0.3%, or 0.2 Bcf/d, and imports from Canada fell by 13.4%, or 0.7 Bcf/d. The decline in imports was the strongest in the Northeast, which experienced unseasonably warm weather for the report period. Liquefied natural gas sendout remained at minimal levels.

Consumption decreases substantially. U.S. consumption of natural gas decreased by 8.0% compared to the previous report week, led by a decrease in the residential/commercial sector. Residential/commercial consumption fell by 16.4% this week, or 5.4 Bcf/d, as a result of warmer weather, particularly late last week and over the weekend. Consumption in other sectors declined as well; consumption for power generation decreased by 1.6%, and industrial consumption decreased by 3.6%. Exports to Mexico were essentially flat, but are 92% higher than last year at this time. Mexico has been working on pipeline projects to support natural gas-fired generation in the region as part of the country's longer-term energy reform program.

more price data

Storage

Net storage withdrawals are smaller than the five-year average and last year's withdrawals. The net withdrawal for the storage week was 34 Bcf compared with the 76 Bcf net storage withdrawal reported the previous week. This withdrawal compares with the five-year (2010–14) average net withdrawal of 120 Bcf for the week and last year's withdrawal of 61 Bcf for the same week. The working natural gas inventory for the storage week ending December 11 totaled 3,846 Bcf, which was 541 Bcf (16%) higher than last year at this time and 322 Bcf (9%) higher than the five-year average for this week.

Storage withdrawals are smaller than market expectations. Market expectations, on average, called for a withdrawal of 41 Bcf for this week. When the EIA storage report was released at 10:30 a.m. on December 17, the January Nymex price fell about 3¢/MMBtu, to about $1.81/MMBtu and oscillated between $1.77/MMBtu and $1.83/MMBtu in the following hour.

Working gas withdrawals are the lowest on record thus far in the 2015-2016 heating season. This week's 34-Bcf withdrawal marked the third smallest net withdrawal reported in December in the history of the WNGSR. The smallest December net withdrawal on record since 2010 totaled 20 Bcf in December 2011. The smallest net withdrawal ever reported in December totaled 11 Bcf in 2006. Since working gas stocks peaked at 4,009 Bcf on November 20, 2015, working gas stocks have declined 163 Bcf, or 54 Bcf/week, which is significantly below the five-year average of about 88 Bcf/week over the same period.

Temperatures during the storage report week are warmer than normal. Temperatures in the Lower 48 states averaged 45° for the storage report week, 7° warmer than the 30-year normal temperature and 3° warmer than the average temperature during the same week last year. There were 139 population-weighted heating degree days (HDD) during this report week, 26 HDD fewer than the five-year average and 23 HDD fewer than during the same period last year.

more storage data

See also:

Natural Gas Dry Production and Henry Hub Spot Prices, January 2010 - September 2015


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
10-Dec
Fri,
11-Dec
Mon,
14-Dec
Tue,
15-Dec
Wed,
16-Dec
Henry Hub
1.91
1.77
1.69
1.65
1.68
New York
1.33
0.90
1.40
1.71
1.48
Chicago
1.96
1.75
1.83
1.75
1.85
Cal. Comp. Avg,*
2.24
2.09
2.19
2.28
2.31
Futures ($/MMBtu)
January contract
2.015
1.990
1.894
1.822
1.790
February contract
2.075
2.050
1.959
1.886
1.866
*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: (12/9/15 - 12/16/15)
Percent change for week compared with:
 
last year
last week
Gross production
-0.90%
-0.29%
Dry production
-0.90%
-0.29%
Canadian imports
-18.41%
-13.37%
      West (net)
-3.48%
-2.66%
      Midwest (net)
30.18%
-0.31%
      Northeast (net)
-135.79%
-243.86%
LNG imports
308.01%
4.00%
Total supply
-2.03%
-1.20%
Source: BENTEK Energy LLC
U.S. consumption - Gas Week: (12/9/15 - 12/16/15)
Percent change for week compared with:
 
last year
last week
U.S. consumption
-11.3%
-8.4%
Power
10.1%
-1.6%
Industrial
-5.1%
-3.6%
Residential/commercial
-26.9%
-16.4%
Total demand
-9.1%
-8.0%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, December 11, 2015
Change from
 
last week
last year
Oil rigs
524
-3.85%
-66.11%
Natural gas rigs
185
-3.65%
-46.53%
Miscellaneous
0
0.00%
-100.00%
Rig numbers by type
Fri, December 11, 2015
Change from
 
last week
last year
Vertical
91
-12.50%
-72.42%
Horizontal
554
-2.64%
-59.47%
Directional
64
0.00%
-67.35%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2015-12-25
2015-12-18
change
East
876
894
-18
Midwest
1,025
1,051
-26
Mountain
195
198
-3
Pacific
338
346
-8
South Central
1,322
1,325
-3
Total
3,756
3,814
-58
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(12/11/14)
5-year average
(2010-2014)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
796
12.3
855
4.6
West
927
15.0
987
8.0
Producing
170
19.4
199
2.0
Total
3,305
16.4
3,524
9.1
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Dec 10)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
167
-49
-52
0
0
0
Middle Atlantic
165
-41
-51
0
0
0
E N Central
180
-55
-47
0
0
0
W N Central
171
-91
-65
0
0
0
South Atlantic
125
-19
-11
11
2
3
E S Central
125
-23
6
0
-1
0
W S Central
80
-29
5
2
-1
-4
Mountain
159
-58
9
0
0
0
Pacific
75
-39
14
0
-1
0
United States
139
-46
-23
2
0
0
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Dec 10, 2015

Mean Temperature (F) 7-Day Mean ending Dec 10, 2015

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Dec 10, 2015

Mean Temperature Anomaly (F) 7-Day Mean ending Dec 10, 2015

Source: NOAA/National Weather Service