In the News:
December natural gas consumption notably up over last year and five-year average
Total U.S. natural gas consumption has averaged 92 billion cubic feet per day (Bcf/d) during the first three weeks of December 2016, exceeding last year's level by 21% and topping the previous five-year (2011–15) average by 17%, according to data from PointLogic. This increased consumption has predominantly been driven by the residential/commercial sector, where consumption rose by 13 Bcf/d, or 45%, from the same period last year. Increased industrial and electric power consumption (power burn) account for a 1.6 Bcf/d (7%) and 1.1 Bcf/d (4%) increase over 2015, respectively. Colder-than-normal temperatures, particularly in key natural gas demand regions of the Northeast and Midwest, drove most of the increased consumption in the residential sector, while increased heating demand for electric power likely contributed to the increased power burn.
Heating demand started low in December, but quickly increased. During the first week of December, heating degree days (HDD) were 2% below normal in the Lower 48 states. However, arctic temperatures moved into large portions of the region during the week ending December 15 and raised HDD 11% above normal, increasing demand for natural gas. Low temperatures in key natural gas consuming areas—including the New England, Middle Atlantic, and East and West North Central U.S. Census divisions, where HDD were more than 10% greater than normal—were the primary driver behind the increased heating demand.
Natural gas consumption levels have generally tracked temperatures. During the first week of December, natural gas consumption averaged 80 Bcf/d, slightly higher than its previous five-year (2011–15) average. From December 8–21, natural gas consumption averaged 98 Bcf/d. On December 15, natural gas consumption exceeded the 100 Bcf/d threshold for the first time in the 2016–17 heating season, reaching an estimated 111 Bcf/d. Triple-digit consumption days are generally rare in December. However, from December 15–21, natural gas consumption has averaged 103 Bcf/d and topped 100 Bcf during 4 out of 6 days. These periods of increased demand resulted in significant price swings in some parts of the country. For example, since December 1, prices at the Henry Hub have ranged between $3.41/MMBtu and $3.76/MMBtu, while prices at the Algonquin Citygate—the entry point into the New England market—reached its peak this month of $12.47/MMBtu on December 14, climbing from $3.64 on December 1.
Overview:
(For the Week Ending Wednesday, December 21, 2016)
- Natural gas spot prices fell at most locations this report week (Wednesday, December 14 to Wednesday, December 21). The Henry Hub spot price fell from $3.52 per million British thermal units (MMBtu) last Wednesday to $3.48/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the January 2017 contract remained flat Wednesday to Wednesday at $3.542/MMBtu.
- Net working gas withdrawals from storage totaled 209 billion cubic feet (Bcf) for the week ending December 16. This is the largest December withdrawal on record. Working gas stocks stand at 3,597 Bcf, which is 2% above the five-year (2011–15) average for this week and 6% below last year at this time.
- The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 18¢, closing at $6.54/MMBtu for the week ending December 16. The price of natural gasoline, ethane, butane, and isobutane fell by 2%, 2%, 1%, and 15%, respectively. The price of propane rose by 1%.
- According to Baker Hughes, for the week ending Friday, December 16, the natural gas rig count increased by 1 to 126. The number of oil-directed rigs rose by 12 to 510. The total rig count climbed by 13, and it now stands at 637.
Prices/Supply/Demand:
Prices decline across the United States. This report week (Wednesday, December 14 to Wednesday, December 21), the Henry Hub spot price fell 4¢, from $3.52/MMBtu last Wednesday to $3.48/MMBtu yesterday. Prices generally decreased across all regions as this week's temperatures recovered from the polar vortex conditions, which supported price increases last week. The largest price decreases occurred in the Northeast region.
At the Chicago Citygate, prices decreased 29¢ from $3.78/MMBtu last Wednesday to $3.49/MMBtu yesterday. Prices at PG&E Citygate in Northern California gained 8¢, up from $3.65/MMBtu last Wednesday to $3.73/MMBtu yesterday. The price at SoCal Citygate decreased 12¢ from $3.66/MMBtu last Wednesday to $3.54/MMBtu yesterday.
Northeast prices decrease substantially week over week. Average temperatures rose throughout the Northeast, leading to substantial price decreases for the region. Prices at the Algonquin Citygate, which serves Boston-area consumers, fell $5.70 over the week, from $12.47 last Wednesday to $6.77 yesterday as average temperatures in Boston rose from 23°F to 37°F over the same period. At the Transcontinental Pipeline Zone 6 trading point for New York, prices saw the largest decline over the week, falling from $19.35/MMBtu to $3.65/MMBtu. The Northeast regional average price decreased from $11.03/MMBtu to $4.66/MMBtu over the report week.
Tennessee Zone 4 Marcellus spot price increased 2¢, from $2.88/MMBtu last Wednesday to $2.90/MMbtu yesterday. After a decrease of 26¢ last week, prices at Dominion South in northwest Pennsylvania continued to decline, beginning the week at $3.14/MMBtu and ending the week at $3.02/MMBtu.
Nymex prices flat. The price of the January 2017 contract at Nymex was unchanged Wednesday to Wednesday at $3.542/MMBtu. The price of the 12-month strip averaging January 2017 through December 2017 futures contracts declined 1¢ to $3.457/MMBtu.
Supply remains flat again this week. According to data from PointLogic, the average total supply of natural gas remained the same as the previous report week, averaging 77.4 Bcf/d. Dry natural gas production decreased by 1% compared with the previous report week. Average net imports from Canada increased by 18% from last week.
Demand continues to increase with winter temperatures. Total U.S. consumption of natural gas rose by 11% compared with the previous report week, according to data from PointLogic. Power burn climbed by 10% week over week, while industrial sector consumption increased by 3%. In the residential/commercial sector, consumption increased by 15%. Natural gas exports to Mexico increased 9%.
U.S. liquefied natural gas (LNG) exports. Natural gas pipeline flows to the Sabine Pass liquefaction terminal averaged 1.5 Bcf/d, 14% higher than flows last week. Four vessels (combined LNG-carrying capacity of 14.7 Bcf) departed the terminal last week.
Storage:
Working natural gas stocks post largest December net withdrawals ever recorded. Net withdrawals from storage totaled 209 Bcf, compared with the five-year (2011–15) average net withdrawal of 101 Bcf and last year's net withdrawal of 33 Bcf during the same week. Working natural gas stocks total 3,597 Bcf, which is 78 Bcf above the the five-year average and 226 Bcf below last year at this time. This week's storage withdrawal represents the largest December net withdrawal in the Weekly Natural Gas Storage Report (WNGSR) history, which dates back to late 1994. The substantial storage draw is related to a combination of cold weather, increased electric-sector capacity for natural gas, reduced natural gas production relative to last year, and increased natural gas export volumes.
Withdrawals from storage top five-year average in almost every region of the Lower 48 states. Net working gas withdrawals from storage exceeded the five-year average for every region but the Pacific region. The South Central region, which featured the biggest withdrawal of the five regions this week, tripled its five-year average withdrawal of 22 Bcf, pulling 66 Bcf from storage this week. Most regions are still well above their five-year average levels because of the significant volume of working gas in storage at the start of the heating season. The Pacific region's net withdrawal and working stocks this week were both smaller than the five-year average, likely as a result of inventory restrictions on the Aliso Canyon facility.
Net withdrawals exceed market expectations. According to the Bloomberg survey of natural gas analysts, estimates of net natural gas withdrawals from storage ranged from 194 Bcf to 215 Bcf, with a median of 204 Bcf. The price of the Nymex futures contract for January 2017 delivery at Henry Hub rose 1¢/MMBtu to $3.61/MMBtu at the release of WNGSR, before falling to $3.57/MMBtu in subsequent trading.
Temperatures drop week on week, and remain slightly warmer than normal. Average temperatures in the Lower 48 states fell 6°F on the week and averaged 34°F. Temperatures in most regions were below the seasonal norms for the period. Falling temperatures this week pushed temperatures 3°F below the normal level for this time of year and 16°F lower than last year at this time. HDD in the Lower 48 states totaled 217, compared with 110 last year and a normal of 195.
See also:
| Spot Prices ($/MMBtu) | Thu, 15-Dec |
Fri, 16-Dec |
Mon, 19-Dec |
Tue, 20-Dec |
Wed, 21-Dec |
|---|---|---|---|---|---|
| Henry Hub |
3.55 |
3.46 |
3.52 |
3.36 |
3.48 |
| New York |
7.56 |
4.26 |
5.72 |
3.94 |
3.65 |
| Chicago |
3.65 |
3.93 |
3.54 |
3.34 |
3.49 |
| Cal. Comp. Avg.* |
3.58 |
3.68 |
3.65 |
3.42 |
3.49 |
| Futures ($/MMBtu) | |||||
| January contract | 3.434 |
3.415 |
3.392 |
3.263 |
3.542 |
| February contract |
3.470 |
3.449 |
3.431 |
3.297 |
3.567 |
| *Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg. | |||||
| Source: NGI's Daily Gas Price Index | |||||
| U.S. natural gas supply - Gas Week: (12/15/16 - 12/21/16) | |||
|---|---|---|---|
Average daily values (Bcf/d): |
|||
this week |
last week |
last year |
|
| Marketed production | 78.3 |
79.3 |
81.7 |
| Dry production | 70.4 |
71.3 |
73.8 |
| Net Canada imports | 6.7 |
5.6 |
5.6 |
| LNG pipeline deliveries | 0.3 |
0.3 |
0.2 |
| Total supply | 77.4 |
77.2 |
79.6 |
|
Source: OPIS PointLogic Energy, an IHS Company | |||
| U.S. natural gas consumption - Gas Week: (12/15/16 - 12/21/16) | |||
|---|---|---|---|
Average daily values (Bcf/d): |
|||
this week |
last week |
last year |
|
| U.S. consumption | 102.7 |
92.6 |
81.9 |
| Power | 27.2 |
24.7 |
25.8 |
| Industrial | 24.2 |
23.4 |
22.1 |
| Residential/commercial | 51.3 |
44.5 |
33.9 |
| Mexico exports | 3.8 |
3.5 |
3.4 |
| Pipeline fuel use/losses | 8.9 |
8.0 |
7.1 |
| LNG pipeline receipts | 1.4 |
1.3 |
0.1 |
| Total demand | 116.8 |
105.3 |
92.4 |
|
Source: OPIS PointLogic Energy, an IHS Company | |||
| Rigs | |||
|---|---|---|---|
Fri, December 16, 2016 |
Change from |
||
last week |
last year |
||
| Oil rigs | 510 |
2.4% |
-5.7% |
| Natural gas rigs | 126 |
0.8% |
-25.0% |
| Miscellaneous | 1 |
0.0% |
0.0% |
| Rig numbers by type | |||
|---|---|---|---|
Fri, December 16, 2016 |
Change from |
||
last week |
last year |
||
| Vertical | 71 |
1.4% |
-18.4% |
| Horizontal | 512 |
1.8% |
-8.4% |
| Directional | 54 |
5.9% |
-14.3% |
| Source: Baker Hughes Inc. | |||
| Working gas in underground storage | ||||
|---|---|---|---|---|
Stocks billion cubic feet (Bcf) |
||||
| Region | 2016-12-16 |
2016-12-09 |
change |
|
| East | 810 |
865 |
-55 |
|
| Midwest | 1,007 |
1,071 |
-64 |
|
| Mountain | 230 |
244 |
-14 |
|
| Pacific | 302 |
312 |
-10 |
|
| South Central | 1,248 |
1,314 |
-66 |
|
| Total | 3,597 |
3,806 |
-209 |
|
| Source: U.S. Energy Information Administration | ||||
| Working gas in underground storage | |||||
|---|---|---|---|---|---|
Historical comparisons |
|||||
Year ago (12/16/15) |
5-year average (2011-2015) |
||||
| Region | Stocks (Bcf) |
% change |
Stocks (Bcf) |
% change |
|
| East | 894 |
-9.4 |
846 |
-4.3 |
|
| Midwest | 1,055 |
-4.5 |
974 |
3.4 |
|
| Mountain | 199 |
15.6 |
193 |
19.2 |
|
| Pacific | 350 |
-13.7 |
335 |
-9.9 |
|
| South Central | 1,324 |
-5.7 |
1,171 |
6.6 |
|
| Total | 3,823 |
-5.9 |
3,519 |
2.2 |
|
| Source: U.S. Energy Information Administration | |||||
| Temperature -- heating & cooling degree days (week ending Dec 15) | ||||||||
|---|---|---|---|---|---|---|---|---|
HDD deviation from: |
CDD deviation from: |
|||||||
| Region | HDD Current |
normal |
last year |
CDD Current |
normal |
last year |
||
| New England | 251 |
23 |
138 |
0 |
0 |
0 |
||
| Middle Atlantic | 242 |
25 |
145 |
0 |
0 |
0 |
||
| E N Central | 309 |
61 |
199 |
0 |
0 |
0 |
||
| W N Central | 341 |
67 |
176 |
0 |
0 |
0 |
||
| South Atlantic | 173 |
21 |
117 |
10 |
2 |
-6 |
||
| E S Central | 187 |
29 |
134 |
0 |
-1 |
-3 |
||
| W S Central | 120 |
4 |
77 |
1 |
-1 |
-11 |
||
| Mountain | 200 |
-23 |
-9 |
0 |
0 |
0 |
||
| Pacific | 94 |
-25 |
-40 |
0 |
0 |
0 |
||
| United States | 217 |
22 |
107 |
2 |
1 |
-3 |
||
|
Note: HDD = heating degree day; CDD = cooling degree day Source: National Oceanic and Atmospheric Administration | ||||||||
Average temperature (°F)
7-Day Mean ending Dec 15, 2016
Source: NOAA National Weather Service
Deviation between average and normal (°F)
7-Day Mean ending Dec 15, 2016
Source: NOAA National Weather Service
