Natural Gas

Overview:

(For the Week Ending Wednesday, March 2, 2017)

• Natural gas spot prices rose at most locations this report week (Wednesday, February 22 to Wednesday, March 1). The Henry Hub spot price rose from $2.53 per million British thermal units (MMBtu) last Wednesday to $2.60/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the March 2017 contract expired Friday at $2.627/MMBtu. The April 2017 contract increased to $2.799/MMBtu, up 10¢ Wednesday to Wednesday.
• Net injections to working gas totaled 7 billion cubic feet (Bcf) for the week ending February 24, the first time net injections were positive over a week in February. Working natural gas stocks are 2,363 Bcf, which is 7% less than the year-ago level and 14% greater than the five-year (2012–16) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 69¢, averaging $6.82/MMBtu for the week ending February 24. The price of natural gasoline, ethane, propane, butane, and isobutane all fell, by 2%, 6%, 12%, 13%, and 11%, respectively.
• According to Baker Hughes, for the week ending Friday, February 24, the natural gas rig count decreased by 2 to 151. The number of oil-directed rigs rose by 5 to 602. The total rig count increased by 3, and it now stands at 754.

more summary data

Prices/Supply/Demand:

Prices up across the Lower 48 states. Most price points outside the Northeast saw prices increase by less than 10¢ this report week (Wednesday, February 22 to Wednesday, March 1). The Henry Hub spot price rose 7¢ from $2.53/MMBtu last Wednesday to $2.60/MMBtu yesterday. At the Chicago Citygate, prices increased 9¢ from $2.59/MMBtu last Wednesday to $2.68/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 1¢, up from $3.06/MMBtu last Wednesday to $3.07/MMBtu yesterday. The price at SoCal Citygate also rose 1¢, up from $2.82/MMBtu last Wednesday to $2.83/MMBtu yesterday.

Northeast prices see largest rises. At the Algonquin Citygate, which serves Boston-area consumers, prices went up $1.05 from $2.19/MMBtu last Wednesday to $3.24/MMBtu yesterday. This rise occurred yesterday, as weather forecasts predicted cooler weather in the Northeast. From last Wednesday to Tuesday, Algonquin prices were more stable and averaged $2.18/MMBtu.

At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 26¢ from $2.10/MMBtu last Wednesday to $2.36/MMBtu yesterday. Tennessee Zone 4 Marcellus spot prices advanced 8¢ from $1.93/MMBtu last Wednesday to $2.01/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 13¢ from $2.08/MMBtu last Wednesday to $2.21/MMBtu yesterday. Similar to changes at Algonquin Citygate, these increases occurred primarily during yesterday’s trading.

March contract expires; April contract rises slightly. At the Nymex, the March 2017 contract expired Friday at $2.627/MMBtu, up 4¢ from last Wednesday. The April 2017 contract increased to $2.799/MMBtu, up 10¢ from last Wednesday to yesterday. The price of the 12-month strip averaging April 2017 through March 2018 futures contracts climbed 14¢ to $3.140/MMBtu.

Supply falls slightly. According to data from PointLogic, the average total supply of natural gas decreased by 1% from the previous week. The supply decrease was driven by a decrease in net imports from Canada, which were 15% below the previous week. Dry natural gas production remained constant week over week. More broadly, in December 2016, production decreased year to year from the same month in 2015, and annual production for 2016 was down 2.2% from 2015 levels.

Demand increases. After falling for the past three weeks, total U.S. consumption of natural gas increased 8% this report week over the previous week, according to data from PointLogic. Power burn climbed by 9%, industrial sector consumption increased by 2%, and residential and commercial consumption increased by 12%. Natural gas exports to Mexico decreased 2% week over week.

U.S. LNG exports. Natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 1.5 Bcf/d for the report week, 31% lower than in the previous week. Four vessels (combined LNG-carrying capacity of 14.1 Bcf) departed Sabine Pass last week, and one vessel (LNG-carrying capacity of 3.8 Bcf) is currently loading at the terminal. In February, 15 cargoes were exported from Sabine Pass (carrying an estimated 51.8 Bcf of LNG), matching the previous record of 15 cargoes exported in January, with an estimated LNG export volume of 51.5 Bcf.

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Storage:

Continued unseasonably mild temperatures during the week result in weekly net injections for the first time in February. Net injections into storage totaled 7 Bcf, compared with the five-year (2012–16) average net withdrawal of 132 Bcf and last year's net withdrawal of 67 Bcf during the same week. This is the first time that weekly net injections have ever been reported in February on a national level. There have been three other occasions when net injections have been reported during the peak heating demand months (December–February) in the 23-year history of the weekly working gas estimates. All of those occasions occurred in December. The largest net injection during the peak winter months was 27 Bcf, for the week ending December 4, 1998. The other net increases were close to zero—1 Bcf and 2 Bcf, for the weeks ending December 30, 2005 and December 7, 2012, respectively. Warmer temperatures throughout the week for most of the Lower 48 states contributed to decreased heating demand for natural gas and lower withdrawals from storage. Working gas stocks total 2,363 Bcf, which is 295 Bcf more than the five-year average and 187 Bcf less than last year at this time.

Net injections supported by increases in the South Central region and relatively small withdrawals in the East and Midwest. On a regional basis, two key factors—both driven by mild temperatures—contributed to the 139-Bcf swing between the five-year average net withdrawal of 132 and the 7 Bcf injections for the week. The East region and Midwest region—both large consumers of natural gas for space and water heating—posted net withdrawals far below their five-year averages, withdrawing a combined 13 Bcf, compared with the five-year average of 85 Bcf. The South Central region posted injections totaling 21 Bcf for the week, more than offsetting the relatively small withdrawals reported elsewhere.

Surplus of working gas to the five-year average continues to rise. Working gas stocks increased compared with the five-year average for the fifth time in the past six weeks. In the South Central salt region, the surplus relative to the five-year average totaled 143 Bcf—by far the largest surplus in the Lower 48 states. The Midwest region has the next largest surplus at 123 Bcf. Only the East region and Pacific region posted a deficit to the five-year average, 12 Bcf and 30 Bcf, respectively. However, the deficits in these regions have declined in recent weeks.

Working gas stocks on pace to end the 2016–17 heating season above 2,000 Bcf. If working gas stock changes follow the five-year average for the remainder of the heating season, they will total 2,083 Bcf on March 31. So far in 2017, net withdrawals are 77% below the five-average. Following this slower-than-normal pace, working gas stocks will total 2,241 Bcf by the end of the heating season, which would mark the third time since 2011 that working gas stocks ended the heating season above 2,000 Bcf. The other two times working gas levels topped this threshold at the end of the heating season occurred in 2012 and 2016, when working gas totaled 2,473 Bcf and 2,470 Bcf, respectively. Both of these heating seasons were characterized by warmer-than-normal temperatures and relatively light heating demand for natural gas.

First ever February net injections well above range of market expectations for net withdrawals, and natural gas prices on the Nymex fall in heavy trading. According to the Bloomberg survey of natural gas analysts, estimates of net natural gas storage activity ranged from withdrawals from storage of 18 Bcf to net injections of 1 Bcf, with a median withdrawal of 3 Bcf. The price of the Nymex futures contract for April 2017 delivery at Henry Hub decreased 4¢/MMBtu to $2.74/MMBtu in 1,452 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices recovered somewhat in subsequent trading, climbing back to $2.77/MMBtu within two minutes of the WNGSR release.

Unseasonably mild temperatures prevail throughout the Lower 48 states. Temperatures in the Lower 48 states averaged 50°F which is 12°F higher than the normal and 5°F higher than last year at this time. This pattern prevailed throughout most of the Lower 48 states except for in the Pacific Census region. Temperatures in the Pacific Census region averaged 49°F which is 2°F lower than the normal and 5°F lower than last year at this time. Cooling degree days (CDD) in the Lower 48 states totaled four, compared to three last year and compared to a normal of three. Heating degree days (HDD) in the Lower 48 states totaled 107, compared with 143 last year and a normal of 190.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook