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Natural Gas Weekly Update

for week ending April 6, 2016  |  Release date:  April 7, 2016  |  Next release: April 14, 2016  |  Previous weeks

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

In the News:

Natural gas stocks end heating season at record high level

Working natural gas in storage as of March 31, the traditional end of the heating season, totaled 2,478 billion cubic feet (Bcf), interpolated from EIA’s Weekly Natural Gas Storage Report data released today. This is 868 Bcf (54%) higher than the five-year (2011-15) end-of-March average, and exceeds the previous end-of-March high set in 2012. Net withdrawals during this year's heating season, which started on November 1, 2015, were 728 Bcf lower than the 5-year average and 655 Bcf lower than withdrawals last year.

A year ago, at the end of March 2015, inventories totaled 1,458 Bcf, about 12% less than the five-year average (2010-14) for that time. Since May 2015, inventories have remained greater than the five-year average. Heading into the winter heating season, inventories set a record high at 4,009 Bcf. During most weeks of the heating season, weekly withdrawals were smaller than the five-year average level for the week.

Warmer-than-normal temperatures and relatively high production have led to high end-of-March storage levels. Residential consumption during the November – March withdrawal season averaged an estimated 21.0 Bcf/d, according to EIA’s Short-Term Energy Outlook. This compares to 24.9 Bcf/d last year and a five-year average of 23.5 Bcf/d. While production showed signs of flattening during the winter, it ended the period at relatively high levels.

Overview:

(For the Week Ending Wednesday, April 6, 2016)

  • Natural gas spot price movements were mixed this report week (Wednesday, March 30, to Wednesday, April 6). The Henry Hub spot price rose slightly during the report week from $1.84 per million British thermal units (MMBtu) to $1.86/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the May 2016 contract fell over the report week from $1.996/MMBtu last Wednesday to $1.911/MMBtu yesterday.
  • Net injections into working gas storage totaled 12 Bcf for the week ending April 1. At 2,480 Bcf, working gas stocks are 68.5% above the year-ago level and 54.4% above the five year (2011-15) average for this time of year.
  • For the week ending April 1, the number of both oil and gas rigs continued to decline, according to the Baker Hughes rig count. Gas-directed rigs decreased by 4, to 88, and oil-directed rigs fell by 10, to 362. The total rig count fell by 14, and now stands at 450.
  • The natural gas plant liquids (NGPL) composite price at Mont Belvieu, Texas, decreased by 17¢ to $4.45/MMBtu for the week ending Friday, April 1. The prices of all natural gas liquids products fell this week: ethane fell by 5.5%, propane fell by 4.1%, butane fell by 3.4%, isobutane fell by 3.2%, and natural gasoline fell by 1.5%. This week’s decline in liquids prices is likely related to crude oil prices, which fell by 6.0% over the period, averaging $36.82 per barrel.

more summary data

Prices/Demand/Supply:

Prices movements are mixed around the country, generally following weather. Compared to the previous report period, weather for this week was on average milder in the West Coast and Rockies, resulting in minor declines in prices for those regions. The PG&E Citygate price fell from $1.95/MMBtu to $1.91/MMBtu Wednesday to Wednesday. Similarly, the price at Cheyenne Hub in southeast Wyoming fell 2¢, closing at $1.69/MMBtu yesterday. The Gulf Coast, Midwest, and Northeast experienced somewhat colder weather, particularly midway through the report week, starting over the weekend through Tuesday. The Henry Hub spot price rose slightly during the report week from $1.84/MMBtu to $1.86/MMBtu yesterday, hitting an intraweek peak of $1.94 on Monday.

Northeast prices jump up on late-season snow storm. Prices at most locations in the Northeast increased this week, with the region getting hit by a weekend snow storm that knocked out power for over half a million customers. The Algonquin Citygate price jumped from $1.30/MMBtu last Wednesday to $5.72/MMBtu on Monday, settling at $2.52 yesterday. Prices at Transco Zone 6 serving New York City saw similar movements but to a smaller magnitude. Prices began the week at $1.28/MMBtu last Wednesday, rose to $2.01/MMBtu on Monday, and settled at $1.84/MMBtu yesterday.

Marcellus prices increase significantly. At Dominion South in northwest Pennsylvania, prices began at $1.14/MMBtu last Wednesday and ended the week at $1.47/MMBtu yesterday. The Tennessee Zone 4 Marcellus price similarly moved from $1.04/MMBtu last Wednesday to $1.44/MMBtu yesterday. Prices at this trading location haven’t been this high since mid-2015. Marcellus prices continue to trade at a discount to Henry Hub, but the spread has been narrowing thanks to infrastructure build-out.

Nymex prices decrease. At the Nymex, the May 2016 contract fell over the report week from $1.996/MMBtu last Wednesday to $1.911/MMBtu yesterday. The 12-month strip, which averages May 2016 through April 2017 Nymex contracts, fell slightly, from $2.508/MMBtu to $2.410/MMBtu from Wednesday to Wednesday. The futures strip indicates that markets anticipate prices to rise over the next year.

Supply increases. Total supply increased by 1.1% for the report period, according to data from Bentek Energy. This was driven by a substantial increase in imports from Canada, which rose by 23.2% week on week, an increase of about 1 billion cubic feet per day (Bcf/d). Dry production fell by 0.2% and LNG imports increased by 3.6%. LNG imports are a negligible contributor to supply.

Consumption increases slightly. Overall consumption this week increased by 0.5%. Residential and commercial demand increased by 1.4%, and exports to Mexico increased by 2.2%. Industrial demand fell 0.3%, and power demand was essentially flat, falling by 0.1% nationally but with variation across regions.

more price data

Storage:

Working gas stocks post net injections during final week of 2015-16 heating season. Net injections to working gas storage totaled 12 Bcf during the report week, compared with the five-year (2011-15) average net withdrawal of 19 Bcf for this time of year. As a result, the surplus to the five-year average increased 31 Bcf, to 874 Bcf -- its highest level in 2016. The surplus compared with year-ago levels increased 6 Bcf to 1,008 Bcf.

Working gas stocks set record high for the end of heating season. Working gas in storage exceeds the five-year (2011-15) maximum level of 2,474 Bcf by 6 Bcf. This marks the highest level reported for the end of the heating season, which traditionally occurs on March 31. The previous all-time record high for the end of the heating season was in 2012, when working gas stocks totaled 2,473 Bcf.

Net injections into storage during the report week were within the range of expectations. Analyst expectations for injections in to storage generally ranged between 4 and 15 Bcf, with a median of 7 Bcf. At the release of the storage report, the price of the Nymex natural gas futures contract for May delivery at the Henry Hub fell 2¢/MMBtu in 542 trades. However, the price rebounded to its prerelease level of $1.97/MMBtu within two minutes.

Temperatures were higher than normal during the storage week. Temperatures in the Lower 48 states averaged 51°F during the report week, 6% higher than normal and 5% above last year at this time. These above-normal temperatures continue the pattern that has occurred since the beginning of the 2015-16 heating season on November 1, 2015. Temperatures were above normal during 19 out of 22 weeks in the 2015-16 heating season. Cumulative heating degree-days during this period were 17% below normal.

more storage data

See also:

Rockies Express Pipeline (REX) Zone 3


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
31-Mar
Fri,
01-Apr
Mon,
04-Apr
Tue,
05-Apr
Wed,
06-Apr
Henry Hub
1.93
1.88
1.94
1.91
1.86
New York
1.29
1.71
2.01
1.97
1.84
Chicago
1.96
1.89
2.01
1.96
1.92
Cal. Comp. Avg,*
1.85
1.71
1.81
1.83
1.80
Futures ($/MMBtu)
May contract
1.959
1.956
1.998
1.954
1.911
June contract
2.054
2.052
2.090
2.050
2.004
*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: (3/30/16 - 4/6/16)
Percent change for week compared with:
 
last year
last week
Gross production
-0.9%
-0.2%
Dry production
-0.8%
-0.2%
Canadian imports
6.8%
23.2%
      West (net)
5.9%
-4.3%
      Midwest (net)
7.9%
26.9%
      Northeast (net)
8.0%
-186.6%
LNG imports
124.5%
3.6%
Total supply
-0.2%
1.1%
Source: BENTEK Energy LLC
U.S. consumption - Gas Week: (3/30/16 - 4/6/16)
Percent change for week compared with:
 
last year
last week
U.S. consumption
8.9%
0.4%
Power
8.1%
-0.1%
Industrial
2.4%
-0.3%
Residential/commercial
12.3%
1.4%
Total demand
9.9%
0.5%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, April 01, 2016
Change from
 
last week
last year
Oil rigs
362
-2.69%
-54.86%
Natural gas rigs
88
-4.35%
-60.36%
Miscellaneous
0
0.00%
-100.00%
Rig numbers by type
Fri, April 01, 2016
Change from
 
last week
last year
Vertical
55
3.77%
-59.56%
Horizontal
346
-3.62%
-56.70%
Directional
49
-5.77%
-47.31%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2016-04-01
2016-03-25
change
East
434
439
-5
Midwest
548
555
-7
Mountain
149
147
2
Pacific
265
262
3
South Central
1,084
1,065
19
Total
2,480
2,468
12
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(4/1/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
246
76.4
298
45.6
Midwest
257
113.2
331
65.6
Mountain
116
28.4
114
30.7
Pacific
272
-2.6
205
29.3
South Central
581
86.6
659
64.5
Total
1,472
68.5
1,606
54.4
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Mar 31)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
148
-26
-50
0
0
0
Middle Atlantic
121
-38
-74
0
0
0
E N Central
136
-28
-53
0
0
0
W N Central
141
-20
-2
0
-1
0
South Atlantic
57
-30
-48
21
8
11
E S Central
64
-18
-32
1
-4
0
W S Central
41
-5
10
17
3
-4
Mountain
151
11
76
2
-2
-11
Pacific
77
-4
56
0
-2
-2
United States
105
-19
-16
6
1
0
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Mar 31, 2016

Mean Temperature (F) 7-Day Mean ending Mar 31, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Mar 31, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Mar 31, 2016

Source: NOAA/National Weather Service