Natural Gas

‹ See the most recent Natural Gas Weekly Update

Natural Gas Weekly Update

for week ending September 7, 2016   |  Release date:  September 8, 2016   |  Next release:  September 15, 2016   |   Previous weeks

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

In the News:

High natural gas summer storage inventories contribute to low prices and increased power burn

With a late-summer heat wave across much of the eastern half of the country, natural gas consumed for power (power burn) reached 36.2 billion cubic feet (Bcf) on Wednesday, according to PointLogic data. The current high levels of power burn follow record gas consumption for power over the summer. From June through August, power burn averaged 35.2 Bcf per day, 9% higher than the same months last year, and 23% higher than the five-year (2011-15) average. The total number of cooling degree-days (CDD) from June through August were 12% above the same period last year, and 24% above normal for the period.

While higher demand for electricity is a primary contributor to increased use of natural gas for generation, relatively low natural gas prices this summer were also a contributing factor to the high power burn. The natural gas price at the U.S. benchmark Henry Hub in Louisiana averaged $2.74 per million British thermal units (MMBtu) from June through August. This is 2% lower than last year at the same time, and 22% lower than the five-year average for that time period. Low prices, driven in part by high natural gas storage levels, allowed natural gas to better compete with coal as a fuel for base-load generation.

U.S natural gas inventories stood at an all-time high of 2,480 Bcf at the beginning of the injection season on April 1, just exceeding the previous high of 2,478 Bcf set in April 2012. Similar to 2012, the relatively high storage levels this year reduced the volume of natural gas that is needed to be injected into storage to reach average working gas levels at the start of the heating season and put downward pressure on the price. Since April 1, injections of natural gas into storage have totaled 957 Bcf. Despite being 46% lower than injections last year, and 37% lower than the five-year average, storage inventories remain higher than both last year and the five-year average levels.

Overview:

(For the Week Ending Wednesday, September 7, 2016)

  • Natural gas spot prices were mixed this report week (Wednesday, August 31 to Wednesday, September 7). The Henry Hub spot price fell from $2.94/MMBtu last Wednesday to $2.82/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the October 2016 contract fell 21¢, from $2.887/MMBtu last Wednesday to $2.676/MMBtu yesterday.
  • Net injections to working gas totaled 36 Bcf for the week ending September 2. Working gas stocks are 3,437 Bcf, which is 6% greater than the year-ago level and 10% greater than the five-year (2011-15) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 20¢, closing at $4.71/MMBtu for the week ending September 2. The price of natural gasoline, propane, butane, and isobutane fell by 13%, 1%, 3%, and 5%, respectively. The price of ethane rose by 2%.
  • According to Baker Hughes, for the week ending Friday, September 2, the natural gas rig count increased by 7 to 88, the largest weekly increase since April 2015. The number of oil-directed rigs rose by 1 to 407. The total rig count climbed by 8, and now stands at 497.

more summary data

Prices/Supply/Demand:

Spot prices fall outside the Northeast. This report week, the Henry Hub spot price fell 12¢ from $2.94/MMBtu last Wednesday to $2.82/MMBtu yesterday. At the Chicago Citygate, prices decreased 9¢ from $2.90/MMBtu last Wednesday to $2.81/MMBtu yesterday. Prices at PG&E Citygate in California lost 13¢, going from $3.37/MMBtu last Wednesday to $3.24/MMBtu yesterday.

Northeast prices increase significantly. Prices at the Algonquin Citygate, which serves Boston-area consumers, rose 82¢ from $2.84/MMBtu last Wednesday to $3.66/MMBtu yesterday, after hitting a low for the week of $1.83/MMBtu on Friday, September 2. At the Transcontinental Pipeline’s Zone 6 trading point for New York, prices doubled from $1.39/MMBtu last Wednesday to $2.83/MMBtu yesterday. These Northeast prices swings likely resulted from a combination of cooler-than-expected weather and decreased demand for natural gas in regions damaged by Tropical Storm Hermine.

In comparison, Marcellus-area prices saw smaller gains. Tennessee Zone 4 Marcellus spot prices advanced 8¢ from $1.23/MMBtu last Wednesday to $1.31/MMBtu yesterday. Spot prices at Dominion South in northwest Pennsylvania rose 15¢ from $1.22/MMBtu last Wednesday to $1.37/MMBtu yesterday.

Nymex prices decline. At the Nymex, the price of the October 2016 contract decreased 21¢, from $2.887/MMBtu last Wednesday to $2.676/MMBtu yesterday. The price of the 12-month strip averaging October 2016 through September 2017 futures contracts declined 12¢ to $2.982/MMBtu.

Supply remains relatively flat. According to data from PointLogic, total supply of natural gas fell by 1% over the report week, driven by a 14% decrease in average net imports from Canada. Dry production remained constant week over week.

Consumption drops substantially. During the report week, total U.S. consumption of natural gas fell by 8%, according to data from PointLogic. With cooler temperatures, power burn declined by 14% week over week, whereas industrial sector consumption stayed constant, averaging 19.5 Bcf/d. In the residential and commercial sectors, consumption increased by 1%. Natural gas exports to Mexico were down 1%.

U.S. liquefied natural gas (LNG) exports. Natural gas pipeline flows to the Sabine Pass liquefaction terminal averaged 1.2 Bcf/d, 79% higher than flows last week. The flows to the terminal reached nearly 1.36 Bcf/d on Sunday, September 4, the highest volume to-date, as flows on both Creole Trail and NGPL pipelines increased to 0.74 Bcf/d and 0.62 Bcf/d, respectively. The four-week maintenance on Trains 1 and 2 wet/dry gas flaring equipment has been postponed until later in the month. Two vessels (combined LNG-carrying capacity 7.2 Bcf) left the terminal on September 1 and September 4, and one vessel (LNG-carrying capacity 2.8 Bcf) is currently loading at the terminal.

more price data

Storage:

Injections to storage continue at slower-than-normal rate. Net injections into storage totaled 36 Bcf, compared with the five-year (2011-15) average net injection of 64 Bcf and last year’s net injections of 78 Bcf during the same week. Working gas stocks total 3,437 Bcf, 306 Bcf above the five-year average and 196 Bcf above last year at this time. When the refill season began on April 1, working gas stocks were 874 Bcf above the five-year average.

Working gas stocks continue to decline in the South Central. Net withdrawals totaled 9 Bcf in the South Central region, with salt dome facilities accounting for 7 Bcf of the total. This marks the eighth straight week that working gas stocks in the South Central region declined. Withdrawals from storage in the region are on a record-setting pace this summer, with net withdrawals from storage occurring more frequently and at larger volumes than ever before. So far in the refill season (April 1-October 31), net withdrawals from storage in the salt dome facilities in the region have totaled 43 Bcf, while net injections at the non-salt facilities have totaled 119 Bcf. This compares with the five-year average net injections of 71 Bcf in the salt dome facilities and 265 Bcf in the non-salt dome facilities. Nevertheless, working gas stocks in the South Central region remain 17% above the five-year average for this time of year.

Net injections on the low end of market expectations. Estimates of net injections into storage generally ranged from 33 to 51 Bcf, with a median of 43 Bcf. As a result, the price of the Nymex contract for October delivery at the Henry Hub rose 3¢/MMBtu to $2.78/MMBtu, in 987 trades at the release of the Weekly Natural Gas Storage Report. Prices varied somewhat in subsequent trading, climbing a bit before declining and stabilizing at $2.77/MMBtu, within two minutes of the release.

Spread to the January futures price declines on the week. During the most recent storage week, the average natural gas spot price at the Henry Hub was $2.92/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.30/MMBtu, a difference of 39¢/MMBtu. A year ago, the premium was 33¢/MMBtu.

Temperatures rise from week-ago levels, remain higher than normal. Temperatures in the Lower 48 states averaged 76°F, 4°F more than normal and 2°F more than last year at this time. Cooling degree-days (CDD) in the Lower 48 states totaled 79, compared with 65 last year and a normal of 54.

more storage data

See also:

Summer power burn and Henry Hub spot price


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
1-Sep
Fri,
2-Sep
Mon,
5-Sep
Tue,
6-Sep
Wed,
7-Sep
Henry Hub
2.91
2.85
Holiday
2.82
2.82
New York
1.33
1.23
Holiday
2.16
2.83
Chicago
2.84
2.77
Holiday
2.81
2.81
Cal. Comp. Avg.*
2.97
2.79
Holiday
2.89
2.84
Futures ($/MMBtu)
October Contract
2.792
2.792
Holiday
2.717
2.676
November Contract
2.908
2.898
Holiday
2.842
2.811
*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: (9/1/16 - 9/7/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
80.8
81.1
82.5
Dry production
72.7
72.9
74.1
Net Canada imports
5.3
6.2
5.5
LNG pipeline deliveries
0.2
0.2
0.2
Total supply
78.2
79.3
79.7

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: (9/1/16 - 9/7/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
57.2
62.1
59.9
    Power
30.6
35.7
32.6
    Industrial
19.5
19.4
19.3
    Residential/commercial
7.2
7.1
8.0
Mexico exports
3.5
3.5
3.3
Pipeline fuel use/losses
6.4
6.7
6.7
LNG pipeline receipts
1.2
0.7
0.0
Total demand
68.3
73.0
69.9

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, September 02, 2016
Change from
 
last week
last year
Oil rigs
407
0.2%
-38.5%
Natural gas rigs
88
8.6%
-56.4%
Miscellaneous
2
0.0%
0.0%
Rig numbers by type
Fri, September 02, 2016
Change from
 
last week
last year
Vertical
60
-3.2%
-50.0%
Horizontal
395
4.2%
-40.1%
Directional
42
-12.5%
-50.6%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-09-02
2016-08-26
change
East
812
796
16
Midwest
928
904
24
Mountain
224
222
2
Pacific
313
310
3
South Central
1,160
1,169
-9
Total
3,437
3,401
36
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(9/2/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
764
6.3
770
5.5
Midwest
839
10.6
854
8.7
Mountain
190
17.9
181
23.8
Pacific
348
-10.1
331
-5.4
South Central
1,101
5.4
995
16.6
Total
3,241
6.0
3,131
9.8
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Sep 01)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
0
-8
-2
61
41
26
Middle Atlantic
0
-5
-2
72
40
23
E N Central
2
-7
-7
61
30
20
W N Central
5
-8
0
53
10
0
South Atlantic
0
-1
0
110
30
27
E S Central
0
-1
-1
112
39
41
W S Central
0
0
0
112
3
8
Mountain
4
-12
4
68
9
-8
Pacific
1
-5
-1
54
14
-7
United States
1
-5
-2
79
25
14
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Sep 01, 2016

Mean Temperature (F) 7-Day Mean ending Sep 01, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Sep 01, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Sep 01, 2016

Source: NOAA/National Weather Service