Natural Gas

‹ See the most recent Natural Gas Weekly Update

Natural Gas Weekly Update

for week ending June 1, 2016   |  Release date:  June 2, 2016   |  Next release:  June 9, 2016   |   Previous weeks

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

In the News:

Use of natural gas for power generation ticks upward

Warm summerlike weather in recent days has led to increased consumption of natural gas for power generation (power burn), as air-conditioning demand ramped up, according to data from PointLogic. Power burn on May 31 was at its highest level so far this year, at 31.2 billion cubic feet (Bcf), as temperatures reached into the 80s and 90s in many areas of the United States. Temperatures are expected to remain warm in the coming days.

Consumption of natural gas for power generation has remained relatively high in recent years, with 2015 setting a record high for natural gas burned for power generation. So far in 2016, average power burn has exceeded 2015 levels by 8.6%, or 2.0 Bcf per day (Bcf/d), according to PointLogic. The U.S. Energy Information Administration expects that this trend will continue, with EIA's current Short-Term Energy Outlook forecasting that power burn in 2016 will exceed last year's record by 4.0%. Additionally, EIA forecasts that for the year, natural gas generation as a share of total generation will exceed coal for the first time on record. Much of the growth in power burn is coming from the Southeast, the largest consuming region in the United States. The Southeast showed a 10.4% increase in power burn from May 2015 to May 2016.

Low natural gas prices and growth in natural gas power generation infrastructure are the main driving factors behind this consumption growth. While the summer season is generally the time of year when power burn is highest, because of air-conditioning demand, gas consumption for power generation has also been rising in the winter, as natural gas makes up a larger share of baseload generation.

Overview:

(For the Week Ending Wednesday, June 1, 2016)

  • Natural gas spot prices rose substantially at most market locations this report week (Wednesday, May 25, to Wednesday, June 1). The Henry Hub spot price rose by 49¢, from $1.77 per million British thermal unit (MMBtu) last Wednesday to $2.26/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the June 2016 contract expired on Thursday, May 26, at $1.963/MMBtu. The price of the July contract rose from $2.181/MMBtu last Wednesday to $2.381/MMBtu yesterday.
  • Net injections to working gas totaled 82 billion cubic feet (Bcf) for the week ending May 27. Working gas stocks are 2,907 Bcf, which is 32% above the year-ago level and 35% above the five-year (2011-15) average for this week.
  • According to Baker Hughes, for the week ending May 27, the natural gas rig count increased by 2 to 87 and oil-directed rigs fell by 2 to 316. The total rig count remained flat week over week at 404.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 3% to $5.26/MMBtu for the week ending Friday, May 27. The price of natural gasoline rose 1%. Isobutane, butane, and propane fell by 3%, 3%, and 6%, respectively, while ethane prices remained constant.

more summary data

Prices/Supply/Demand:

Spot prices rise with temperatures. The Henry Hub spot price rose by 49¢, from $1.77/MMBtu last Wednesday to $2.26/MMBtu yesterday. This is the highest Henry Hub spot price since January. Prices at most other market locations saw similar increases, as much of the United States experienced early summer heat. At the Chicago Citygate, prices rose from $1.77/MMBtu to $2.24/MMBtu, Wednesday to Wednesday. At the PG&E Citygate in California, the spot price rose from $1.82/MMBtu to $2.40/MMBtu over the report week.

Northeast prices are slightly up. Prices in major northeastern market areas did not post the relatively dramatic increases seen in other areas of the country. At the Algonquin Citygate, which serves Boston-area consumers, prices were flat at $2.01/MMBtu, Wednesday to Wednesday. At the Transcontinental Pipeline's Zone 6 trading point for New York, prices rose from $1.62 last Wednesday to $1.71/MMBtu yesterday.

Marcellus prices rise slightly. Marcellus-area prices increased over the week. The Tennessee Zone 4 Marcellus price rose from $1.38/MMBtu last Wednesday to $1.42/MMBtu yesterday. The price at Dominion South in northwest Pennsylvania rose by 7¢, ending the week at $1.55/MMBtu.

Nymex June contract expires. At the New York Mercantile Exchange (Nymex), the June 2016 contract price expired Thursday at $1.963/MMBtu. The price of the July contract, which moved into the front-month position this week, rose from $2.181/MMBtu last Wednesday to $2.381/MMBtu yesterday.

Supply is flat. According to data from PointLogic, average total supply for the report period remained flat week over week. Dry production was level, averaging 73.5 billion cubic feet per day (Bcf/d) for the week, while net imports from Canada rose 1% and accounted for 5.9 Bcf/d of supply.

Consumption remains steady. Average consumption for the period remained constant, according to data from PointLogic, as increases in power burn offset declines in all other sectors. Consumption of natural gas for power generation rose 12% week over week, while residential/commercial consumption fell 26%. Industrial consumption fell by 2% and exports to Mexico fell 3%.

U.S. Liquified Natural Gas (LNG) exports. The natural gas pipeline flows to Sabine Pass liquefaction terminal averaged 0.55 Billion cubic feet per day (Bcf/d), 4% lower than receipts last week. One vessel (LNG-carrying capacity 3.4 Bcf) is currently loading an export cargo at the terminal.

more price data

Storage:

Working gas stocks continue to climb. Working gas in the Lower 48 states posted its seventh straight week of net injections. Net injections into storage totaled 82 Bcf during the storage report week, compared with the five-year (2011-15) average of 98 Bcf and last year's net injection of 126 Bcf during the same week. As a result, the surplus in storage compared with the five-year average declined from the previous week to 753 Bcf, and the surplus compared with year-ago levels decreased to 712 Bcf. The year-over-year storage surplus fell for the seventh consecutive week.

The 2016 refill season shows stocks well ahead of recent injection seasons. Despite a slow start to the refill season, working gas stocks remain near record-highs for this time of year. Working gas stocks as of last Friday were 74 Bcf above the previous five-year (2011-15) maximum, which occurred in 2012, of 2,833 Bcf for this time of year. Cumulative net injections into working gas total 427 Bcf thus far in the 2016 refill season, compared with the five-year average of 548 Bcf and last year's tally of 723 Bcf during the same period. Cumulative net injections totaled 359 Bcf at this point in the 2012 refill season.

January futures price continues to trade at more than $1 above current spot price. During the most recent storage week, the average natural gas spot price at the Henry Hub was $1.83/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.06/MMBtu, a difference of $1.23/MMBtu. A year ago, the premium was 42¢/MMBtu, suggesting there is more financial incentive this year to buy and store natural gas in the summer for sale in the winter. The average Henry Hub price so far in the injection season this year, from April 1 to May 20, was $1.91/MMBtu, 29% lower than the average value of $2.69/MMBtu for the same period last year.

Stock change is close to analyst expectations. Expected net injections for the week generally ranged from 72 to 96 Bcf, with a median of 84 Bcf.

Climbing temperatures result in falling heating and rising cooling demand for natural gas. Temperatures in the Lower 48 states averaged 65°F during the storage report week, 1% above normal and equal to last year at this time. The Lower 48 states totaled 27 heating-degree days (HDD) for the report week–its lowest level since the beginning of the refill season on April 1. Conversely, cooling degree-days (CDD) in the Lower 48 hit its highest level since the beginning of 2016, totaling 27 CDD. Most of the warming occurred in the northern tier of the Lower 48 states, including the New England, Middle Atlantic, East North Central, and West North Central U.S. Census divisions.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
26-May
Fri,
27-May
Mon,
30-May
Tue,
31-May
Wed,
1-Jun
Henry Hub
1.75
1.79
Holiday
2.09
2.26
New York
1.54
1.52
Holiday
1.60
1.71
Chicago
1.83
1.86
Holiday
2.05
2.24
Cal. Comp. Avg.*
1.66
1.71
Holiday
2.15
2.28
Futures ($/MMBtu)
June Contract
1.963
Expired
Holiday
Expired
Expired
July Contract
2.151
2.169
Holiday
2.288
2.381
August Contract
2.261
2.281
Holiday
2.383
2.453
*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: (5/26/16 - 6/1/16)
Average daily values (Bcf/d):
 
this week
last week
last year
Marketed production
81.4
81.5
81.0
Dry production
73.5
73.6
73.0
Net Canada imports
5.9
5.9
6.0
LNG pipeline deliveries
0.2
0.2
0.2
Total supply
79.6
79.6
79.2

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

U.S. natural gas consumption - Gas week: (5/26/16 - 6/1/16)
Average daily values (Bcf/d):
 
this week
last week
last year
U.S. consumption
57.6
57.7
55.2
    Power
29.6
26.4
24.4
    Industrial
19.6
19.9
19.6
    Residential/commercial
8.4
11.3
11.2
Mexico exports
3.4
3.5
2.8
Pipeloss fuel use/losses
6.5
6.5
6.2
LNG pipeline receipts
0.5
0.6
-
Total demand
68.1
68.3
64.2

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
Fri, May 27, 2016
Change from
 
last week
last year
Oil rigs
316
-0.63%
-51.08%
Natural gas rigs
87
2.35%
-61.33%
Miscellaneous
1
0.00%
-75.00%
Rig numbers by type
Fri, May 27, 2016
Change from
 
last week
last year
Vertical
46
-4.17%
-58.56%
Horizontal
314
0.00%
-53.41%
Directional
44
4.76%
-51.11%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2016-05-27
2016-05-20
change
East
537
511
26
Midwest
655
629
26
Mountain
178
171
7
Pacific
304
298
6
South Central
1,233
1,216
17
Total
2,907
2,825
82
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(5/27/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
430
24.9
463
16.0
Midwest
421
55.6
463
41.5
Mountain
134
32.8
126
41.3
Pacific
313
-2.9
262
16.0
South Central
897
37.5
841
46.6
Total
2,195
32.4
2,154
35.0
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending May 26)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
29
-17
-6
8
6
-5
Middle Atlantic
25
-9
-8
11
3
-9
E N Central
23
-17
-6
16
0
-3
W N Central
17
-18
-20
22
2
10
South Atlantic
17
4
4
47
-1
-13
E S Central
11
-1
-3
37
-2
-2
W S Central
2
0
-5
77
10
23
Mountain
47
-2
-14
15
-12
3
Pacific
52
21
20
0
-9
-1
United States
27
-4
-2
27
-1
-1
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending May 26, 2016

Mean Temperature (F) 7-Day Mean ending May 26, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending May 26, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending May 26, 2016

Source: NOAA/National Weather Service