Natural Gas

Overview:

(For the Week Ending Wednesday, March 22, 2017)

• Natural gas spot price movements were mixed this report week (Wednesday, March 15 to Wednesday, March 22), but they fell sharply in the Northeast. The Henry Hub spot price fell slightly from $3.00/MMBtu last Wednesday to $2.98/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the April 2017 contract price rose 3¢ from $2.981/MMBtu last Wednesday to $3.011/MMBtu yesterday.
• Net withdrawals from working gas totaled 150 billion cubic feet (Bcf) for the week ending March 17. Working natural gas stocks are 2,092 Bcf, which is 16% less than the year-ago level but 15% greater than the five-year (2012–16) average for this week.
• The natural gas plant liquids (NGPL) composite price at Mont Belvieu, Texas, fell by 33¢, averaging $5.88/MMBtu for the week ending March 22. The prices of ethane, propane, butane, and isobutane fell by 5%, 8%, 7%, and 6%, respectively. The price of natural gasoline rose by 1%. To better align with the with natural gas spot prices in this report, NGPL prices now represent averages covering Thursday last week to Wednesday this week (yesterday). Previously, these prices were an average of Monday through Friday prices from the previous week.
• According to Baker Hughes, for the week ending Friday, March 17, the natural gas rig count increased by 6 to 157. The number of oil-directed rigs rose by 14 to 631. The total rig count increased by 21, and it now stands at 789.

more summary data

Prices/Supply/Demand:

Prices mixed. This report week (Wednesday, March 15 to Wednesday, March 22), the Henry Hub spot price fell 2¢ from $3.00/MMBtu last Wednesday to $2.98/MMBtu yesterday. Last report week, the eastern half of the country was affected by unseasonably cold temperatures and a late-winter snowstorm, pushing up prices in the Northeast and Midwest. As temperatures moderated during the current report week, prices generally fell. At the Chicago Citygate, prices decreased 4¢ from $2.93/MMBtu last Wednesday to $2.89/MMBtu yesterday.

The price at PG&E Citygate in Northern California gained 4¢ to $3.19/MMBtu yesterday. The price at SoCal Citygate rose 14¢ from $2.93/MMBtu last Wednesday to $3.07/MMBtu yesterday. Temperatures in California fell over the weekend, pushing the price up 25¢ between Friday and Monday. Additionally, the Aliso Canyon natural gas storage field is not available for full storage service. EIA publishes information about Southern California natural gas and energy prices in the Southern California Daily Energy Report.

Northeast prices fall sharply. Coming off of a late-winter snowstorm and unseasonably cold weather last week, prices in the Northeast fell sharply. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $3.44 from $7.45/MMBtu last Wednesday to $4.01/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased $3.71 from $6.82/MMBtu last Wednesday to $3.11/MMBtu yesterday.

Marcellus prices were largely unaffected by the moderating weather. Tennessee Zone 4 Marcellus spot prices were constant week over week at $2.77/MMBtu. Prices at Dominion South in northwest Pennsylvania fell 3¢ to $2.82/MMBtu yesterday.

April Nymex contract up slightly. At the Nymex, the price of the April 2017 contract increased 3¢, from $2.981/MMBtu last Wednesday to $3.011/MMBtu yesterday. The price of the 12-month strip, which averages the April 2017 through March 2018 futures contracts, climbed 5¢ to $3.258/MMBtu.

Supply falls slightly. According to data from PointLogic, the average total supply of natural gas fell by 1% compared with the previous week. While dry natural gas production remained constant week over week, average net imports from Canada decreased by 4% from last week.

Demand falls significantly. Total U.S. consumption of natural gas fell by 15% compared with the previous report week, according to data from PointLogic. Last week's weather featured unusually cold weather and a snowstorm in the Northeast, which pushed demand up. This week, weather moderated across most of the country, pushing demand down. Week over week, power burn declined by 9%; industrial sector consumption decreased by 5%; and residential/commercial sector consumption declined by 26%. Natural gas exports to Mexico decreased 2%.

U.S. liquefied natural gas (LNG) exports. Natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 2.2 Bcf/d for the report week, 8% higher than the previous week. Four vessels (combined LNG-carrying capacity of 13.9 Bcf) departed Sabine Pass last week, and one vessel (LNG-carrying capacity of 3.8 Bcf) is currently loading at the terminal.

Last week, Cheniere Energy, the operator of the Sabine Pass terminal, received authorization from the Federal Energy Regulatory Commission (FERC) to commence liquefaction and export activities from Train 3. On March 16, Cheniere filed a request with FERC to begin commissioning of Train 4. Once the fourth train at Sabine Pass becomes operational, the total baseload nameplate capacity of the facility (including all four trains) will reach 2.6 Bcf/d, with a maximum operating capacity of 2.9 Bcf/d. The fifth train at the facility, currently under construction, is expected to begin service in mid-2019.

more price data

Storage:

Late winter blast of cold weather during the storage week results in larger withdrawals from working gas storage. Net withdrawals from storage totaled 150 Bcf, compared with the five-year (2012–16) average net withdrawal of 21 Bcf and last year's net injections of 13 Bcf during the same week. Cold temperatures and wintry conditions throughout the week for most of the Lower 48 states east of the Rockies contributed to increased heating demand for natural gas compared with normal levels, leading to larger withdrawals from storage. Working gas stocks totaled 2,092 Bcf, which is 266 Bcf more than the five-year average and 399 Bcf less than last year at this time.

Working gas levels fall relative to the five-year average for the first time in five weeks. All regions in the Lower 48 states, except for the Pacific and Mountain region, posted declines against their five-year averages for the week. In the South Central region, the surplus relative to the five-year average totaled 114 Bcf at salt facilities, and 92 Bcf at nonsalt facilities, down from the previous week's level of 152 Bcf and 106 Bcf, respectively. The Midwest region has a surplus of 109 Bcf.

Working gas stocks remain 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 2,052 Bcf on March 31. So far in 2017, net withdrawals are 19% below the five-year average. Working gas levels topped this threshold at the end of the heating season only two other times, in 2012 and 2016, when working gas totaled 2,473 Bcf and 2,470 Bcf, respectively. Both of those heating seasons were also characterized by warmer-than-normal temperatures and relatively light heating demand for natural gas.

Withdrawals are close to market expectations for the week. According to the Bloomberg survey of natural gas analysts, estimates of net withdrawals from natural gas storage ranged from 140 Bcf to 164 Bcf, with a median withdrawal of 151 Bcf. The price of the Nymex futures contract for April 2017 delivery at Henry Hub decreased 2¢/MMBtu to $2.91/MMBtu in 302 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices varied and rebounded in subsequent trading, reaching $2.91/MMBtu within two hours of the WNGSR release.

Temperatures are lower than normal throughout most of the Lower 48 states during the storage report week. Temperatures in the Lower 48 states averaged 39°F, 5°F lower than the normal and 16°F lower than last year at this time. The colder-than-normal temperatures prevailed throughout most of the Lower 48 states, east of the Rockies. In particular, temperatures were considerably colder than normal in areas of the Lower 48 states where natural gas is an important fuel source for space heating. Temperatures in the New England Census division averaged 23°F, 12°F lower than the normal and 25°F lower than last year at this time. Temperatures in the Middle Atlantic Census division averaged 25°F, 12°F lower than the normal and 26°F lower than last year at this time. Temperatures in the East North Central Census division averaged 25°F, 11°F lower than the normal and 26°F lower than last year at this time. Temperatures in the West North Central Census division averaged 26°F, 10°F lower than the normal and 25°F lower than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook