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Natural Gas Weekly Update

for week ending November 2, 2016  |  Release date:  November 3, 2016  |  Next release: November 10, 2016  |  Previous weeks

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

In the News:

2016 injection season sees record natural gas demand

Total natural gas demand in the Lower 48 states reached record levels during the 2016 injection season (April through October). According to data from PointLogic, natural gas consumption and net exports averaged 71.4 billion cubic feet per day (Bcf/d)—2.2 Bcf/d above the 2015 injection season, which held the previous record. However, the total supply of natural gas decreased by an average of 1.1 Bcf/d compared to the 2015 injection season, according to PointLogic. Several factors contributed to the narrowing of supply and demand over this period:

  • The rise in natural gas use for electricity generation (power burn) was a primary driver of natural gas demand. According to PointLogic data, power burn over the 2016 injection season averaged 2.2 Bcf/d more than in the 2015 injection season. The combination of a hot summer and more natural gas-fired power plants led to multiple days of record power burn.
  • The opening of Sabine Pass, the first liquefied natural gas (LNG) export terminal in the Lower 48 states, marked the onset of a new demand source. Deliveries to Sabine Pass averaged 0.6 Bcf/d over the injection season. Net exports to Mexico also increased as new cross-border pipelines came online.
  • Lower natural gas prices lessened the incentive to produce natural gas. The Henry Hub spot price over the injection season averaged $2.56 per million British thermal units (MMBtu), 12¢ lower than in the 2015 injection season. In addition, rig counts were at record lows. The natural gas rig count from Baker Hughes averaged 90 over the 2016 injection season, 58% lower than in the 2015 injection season.

Other trends had some countervailing effects. Residential/commercial consumption over the injection season fell by an average of 1.0 Bcf/d from 2015, as warmer-than-normal weather during September and October reduced the demand for natural gas-fired heating. Price premiums on winter futures contracts relative to injection-season spot prices equaled or exceeded those in 2015. This incentive to store gas for winter sale seems to have been overshadowed by record-high storage levels at the start of the season; injection rates from April through October were, on average, 39% below those in the 2015 injection season.

Overview:

(For the Week Ending Wednesday, November 2, 2016)

  • Natural gas spot prices were mixed this report week (Wednesday, October 26 to Wednesday, November 2). The Henry Hub spot price fell from $2.68/MMBtu last Wednesday to $2.27/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the November 2016 contract expired Thursday at $2.764/MMBtu. The December 2016 contract decreased to $2.792/MMBtu, down 24¢Wednesday to Wednesday.
  • Net injections to working gas totaled 54 Bcf for the week ending October 28. Working natural gas stocks are 3,963 Bcf, which is 1% greater than the year-ago level and 5% 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 $6.20/MMBtu for the week ending October 28. The price of natural gasoline, ethane, propane, butane, and isobutane all fell, by 3%, 7%, 1%, 2%, and 6%, respectively.
  • According to Baker Hughes, for the week ending Friday, October 28, the natural gas rig count increased by 6 to 114. The number of oil-directed rigs fell by 2 to 441. The total rig count climbed by 4, and it now stands at 557.

more summary data

Prices/Supply/Demand:

Spot prices down outside the Northeast. This report week (Wednesday, October 26 to Wednesday, November 2), the Henry Hub spot price fell 41¢ from $2.68/MMBtu last Wednesday to $2.27/MMBtu yesterday, after reaching a high of $2.80/MMBtu on Monday. At the Chicago Citygate, prices decreased 65¢ from $2.82/MMBtu last Wednesday to $2.17/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 49¢, down from $3.07/MMBtu last Wednesday to $2.58/MMBtu yesterday. The price at SoCal Citygate decreased 65¢ from $2.84/MMBtu last Wednesday to $2.19/MMBtu yesterday. The largest price decreases occurred Tuesday, as weather forecasts began to predict another stretch of warm weather.

Marcellus prices rise. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $1.35 from $3.28/MMBtu last Wednesday to $1.93/MMBtu yesterday as temperatures warmed. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 12¢ from $1.57/MMBtu last Wednesday to $1.69/MMBtu yesterday. Tennessee Zone 4 Marcellus spot prices advanced 35¢ from $1.20/MMBtu last Wednesday to $1.55/MMBtu yesterday, after reaching a low of $1.08/MMBtu on Friday. Prices at Dominion South in northwest Pennsylvania rose 35¢ from $1.26/MMBtu last Wednesday to $1.61/MMBtu yesterday.

November contract expires, December contract price falls. At the Nymex, the November 2016 contract expired last Thursday at $2.764/MMBtu. The December 2016 contract decreased to $2.792/MMBtu, down 24¢ from last Wednesday to yesterday and close to the price of the November contract at its expiration. The price of the 12-month strip averaging December 2016 through November 2017 futures contracts declined 12¢ to $2.959/MMBtu.

Supply flat. According to data from PointLogic, the average total supply of natural gas remained the same as the previous report week, averaging 77.2 Bcf/d. Dry natural gas production remained constant week over week, averaging 71.0 Bcf/d. Average net imports from Canada decreased by 5% from last week, falling by an average of 0.3 Bcf/d.

Demand up. Total U.S. natural gas consumption rose by 1% compared with the previous report week, according to data from PointLogic. Power burn climbed by 5% week over week, as some areas of the country had temperatures in the 70s and 80s. Industrial sector consumption decreased by 1% week over week. Consumption in the residential and commercial sectors also declined by 1%. Natural gas exports to Mexico increased 2%.

U.S. LNG exports. Natural gas pipeline flows to the Sabine Pass liquefaction terminal were relatively high, averaging 1.5 Bcf/d in the past two days and 1.2 Bcf/d over the report week. One vessel (LNG-carrying capacity 3.4 Bcf) departed the terminal on November 1 and one vessel (LNG-carrying capacity 3.2 Bcf) is currently loading at the terminal.

more price data

Storage:

Injections into storage are lower than average as many storage facilities are close to full. Net injections into storage totaled 54 Bcf, compared with the five-year (2011—15) average net injection of 63 Bcf and last year's net injections of 58 Bcf during the same week. Working gas stocks total 3,963 Bcf, which is 173 Bcf more than the five-year average and 48 Bcf more than last year at this time, when working gas stocks set a new five-year high. Working gas in the Midwest and Mountain regions exceed their previous five-year highs of 1,126 Bcf and 230 Bcf, respectively. The East region and the South Central region are 20 Bcf and 33 Bcf below the five-year maximum for their respective regions. The Pacific region is 60 Bcf below its five-year maximum, in large part because of inventory restrictions on the Aliso Canyon facility.

Working gas stocks remain poised to end the 2016 refill season at near record levels. If net injections match the five-year average for the remainder of the refill season, working gas stocks in the Lower 48 will total 3,979 Bcf on October 31. This storage level exceeds the all-time end-of-October high of 3,929 Bcf in 2012. In 2015, working gas stocks totaled 3,926 Bcf at the end of October, before reaching the highest reported level ever of 4,009 Bcf on November 20, 2015. The October Short-Term Energy Outlook forecasts working gas reaching 3,933 Bcf at the end of October.

South Central region draws closer to year-ago levels, salt facilities continue robust injections. Net injections totaled 34 Bcf in the South Central region, with salt dome facilities accounting for net injections of 22 Bcf. Net injections in the region topped the five-year average of 27 Bcf for the week, and nearly doubled the five-year average of 12 Bcf for the salt facilities. Since September 23, when net injections last fell below the five-year average, net injections have totaled 99 Bcf, 60% above the five-year average. Working gas stocks in the South Central region are 9% higher than the five-year average for this time of the year, and working gas stocks at salt dome facilities in the region are 1% above last year at this time.

Net injections are in line with market expectations. Estimates of net injections into storage ranged from 50 Bcf to 62 Bcf, with a median of 57 Bcf. The price of the Nymex futures contract for December delivery at the Henry Hub climbed 4¢/MMBtu to $2.81/MMBtu in 637 trades at the release of EIA's Weekly Natural Gas Storage Report (WNGSR). Prices declined somewhat in subsequent trading, averaging $2.80/MMBtu within two minutes of the release.

Spread to the January futures price remains close to year-ago levels. During the most recent storage week, the average natural gas spot price at the Henry Hub was $2.73/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.34/MMBtu, a difference of 61¢. The premium was 39¢ a year ago.

Temperatures were lower than last week and remain higher than normal. Temperatures in the Lower 48 states averaged 56°F, 2°F higher than normal and 2°F lower than last year at this time. Heating degree days (HDD) in the Lower 48 states totaled 73, compared with 62 last year and a normal of 86.

more storage data

See also:

U.S. natural gas supply and demand, by sector, April to October, change from 2015 to 2016


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
27-Oct
Fri,
28-Oct
Mon,
31-Oct
Tue,
1-Nov
Wed,
2-Nov
Henry Hub
2.69
2.65
2.8
2.53
2.27
New York
1.73
1.26
2.08
1.6
1.69
Chicago
2.73
2.57
2.56
2.24
2.17
Cal. Comp. Avg.*
2.81
2.73
2.70
2.31
2.20
Futures ($/MMBtu)
November Contract
2.764
Expired
Expired
Expired
Expired
December Contract
3.068
3.105
3.026
2.902
2.792
January Contract
3.237
3.263
3.195
3.078
2.978
*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: (10/27/16 - 11/2/16)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.0
79.0
80.9
Dry production
71.0
71.0
72.9
Net Canada imports
6.0
6.3
5.4
LNG pipeline deliveries
0.2
0.2
0.2
Total supply
77.2
77.5
78.5

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: (10/27/16 - 11/2/16)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
60.1
59.2
64.1
    Power
24.4
23.2
24.2
    Industrial
20.3
20.5
20.5
    Residential/commercial
15.4
15.6
19.4
Mexico exports
3.3
3.3
3.0
Pipeline fuel use/losses
6.3
6.5
6.8
LNG pipeline receipts
1.2
0.3
0.0
Total demand
71.0
69.2
73.9

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, October 28, 2016
Change from
 
last week
last year
Oil rigs
441
-0.5%
-23.7%
Natural gas rigs
114
5.6%
-42.1%
Miscellaneous
2
0.0%
0.0%
Rig numbers by type
Fri, October 28, 2016
Change from
 
last week
last year
Vertical
53
-7.0%
-52.7%
Horizontal
450
1.1%
-22.0%
Directional
54
5.9%
-37.2%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2016-10-28
2016-10-21
change
East
940
939
1
Midwest
1,130
1,115
15
Mountain
249
245
4
Pacific
326
326
0
South Central
1,318
1,284
34
Total
3,963
3,909
54
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(10/28/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
913
3.0
923
1.8
Midwest
1,090
3.7
1,082
4.4
Mountain
216
15.3
209
19.1
Pacific
376
-13.3
365
-10.7
South Central
1,320
-0.2
1,212
8.7
Total
3,915
1.2
3,790
4.6
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Oct 27)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
113
-6
-6
0
0
0
Middle Atlantic
109
1
12
1
1
1
E N Central
118
1
38
0
-1
0
W N Central
94
-25
-1
0
-1
-1
South Atlantic
55
-8
10
17
-3
-9
E S Central
47
-16
18
3
-2
-8
W S Central
18
-11
2
29
9
-5
Mountain
58
-53
-31
18
12
10
Pacific
19
-28
6
5
2
-5
United States
73
-13
11
9
2
-3
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Oct 27, 2016

Mean Temperature (F) 7-Day Mean ending Oct 27, 2016

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Oct 27, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Oct 27, 2016

Source: NOAA National Weather Service