Natural Gas

Overview:

(For the Week Ending Wednesday, March 29, 2017)

• Natural gas spot prices were mixed this report week (Wednesday, March 22 to Wednesday, March 29). The Henry Hub spot price rose from $2.98 per million British thermal units (MMBtu) last Wednesday to $3.03/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the April 2017 contract expired yesterday at $3.175/MMBtu. The May 2017 contract price increased to $3.231/MMBtu, up 16¢ Wednesday to Wednesday.
• Net withdrawals from working gas totaled 43 billion cubic feet (Bcf) for the week ending March 24. Working natural gas stocks are 2,049 Bcf, which is 17% 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 6¢, averaging $5.81/MMBtu for the week ending March 29. The price of ethane and propane fell by 2% and 4%, respectively. The price of natural gasoline, butane, and isobutane rose by 3%, 1%, and 2%, respectively.
• According to Baker Hughes, for the week ending Friday, March 24, the natural gas rig count decreased by 2 to 155. The number of oil-directed rigs rose by 21 to 652. The total rig count increased by 20, and it now stands at 809.

more summary data

Prices/Supply/Demand:

Prices mixed. This report week (Wednesday, March 22 to Wednesday, March 29), the Henry Hub spot price rose 5¢ from $2.98/MMBtu last Wednesday to $3.03/MMBtu yesterday. At the Chicago Citygate, prices increased 14¢ from $2.89/MMBtu last Wednesday to $3.03/MMBtu yesterday. Prices at PG&E Citygate in Northern California gained 1¢, up from $3.19/MMBtu last Wednesday to $3.20/MMBtu yesterday. The price at SoCal Citygate decreased 6¢ from $3.07/MMBtu last Wednesday to $3.01/MMBtu yesterday.

Northeast prices fall on more seasonable temperatures. At the Algonquin Citygate, which serves Boston-area consumers, prices fell 95¢ from $4.01/MMBtu last Wednesday to $3.06/MMBtu yesterday, after a low of $2.60/MMBtu on Friday. Prices at Algonquin were below those at Henry Hub from last Thursday through Tuesday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 18¢ from $3.11/MMBtu last Wednesday to $2.93/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices decreased 9¢ from $2.77/MMBtu last Wednesday to $2.68/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 6¢ from $2.82/MMBtu last Wednesday to $2.76/MMBtu yesterday.

April contract expires; May contract rises. At the Nymex, the April 2017 contract expired yesterday at $3.175/MMBtu, up 16¢ from last Wednesday. The May 2017 contract rose to $3.231/MMBtu, up 16¢ from last Wednesday to yesterday. The price of the 12-month strip averaging May 2017 through April 2018 futures contracts climbed 13¢ to $3.379/MMBtu.

Supply falls slightly. According to data from PointLogic, the total supply of natural gas fell by 1% compared with the previous week. Dry natural gas production decreased by roughly 1%, and net imports from Canada decreased by 6%.

Demand falls significantly. Total U.S. consumption of natural gas fell by 10% compared with the previous report week, according to data from PointLogic. Power burn declined by 2% week over week. Industrial sector consumption decreased by 3% week over week. In the residential and commercial sectors, consumption declined by 22% as temperatures moderated from the previous weeks' cold snap in the Northeast. 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 1.8 Bcf/d for the report week, 16% lower than in the previous week. Last week, the Federal Energy Regulatory Commission (FERC) issued a letter order authorizing the start of liquefaction and export activities for Train 3. On March 24, FERC issued a letter order granting Sabine Pass Liquefaction, LLC, and Sabine Pass LNG, L.P.'s request to introduce gas and commission the Train 4 fuel gas system. Two vessels (combined LNG-carrying capacity of 7.6 Bcf) departed Sabine Pass last week and two vessels (LNG-carrying capacity of 6.8 Bcf) were loading at the terminal on Wednesday, March 29.

more price data

Storage:

A return to warmer temperatures during the storage week results in smaller withdrawals from working gas storage. Despite warming temperatures during the storage week in most of the Lower 48 states, net withdrawals exceeded the five-year average on the week. Net withdrawals from storage totaled 43 Bcf, compared with the five-year (2012–16) average net withdrawal of 27 Bcf and last year's net withdrawals of 19 Bcf during the same week. Withdrawals from working gas totaled 150 Bcf during the previous storage week, as most of the Lower 48 states were significantly colder than normal. Working gas stocks totaled 2,049 Bcf, which is 250 Bcf more than the five-year average and 423 Bcf less than last year at this time.

Withdrawals were larger than normal in the East, Midwest, and South Central salt regions. Withdrawals in the East and Midwest regions totaled 31 and 20 Bcf, compared with their five-year average in each region of 13 and 15 Bcf, respectively. Continued colder than normal temperatures in the East and Midwest likely contributed to the larger than average net withdrawals. The South Central salt region posted a net withdrawal of 6 Bcf, compared with the five-year average net injection of 5 Bcf—an 11 Bcf swing for the storage week.

Working gas stocks remain on pace to end the 2016–17 heating season above 2,000 Bcf for the second year in a row. If working gas stock changes follow the five-year average for the remainder of the heating season, they will total 2,036 Bcf on March 31. 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. So far in 2017, net withdrawals are 19% lower than the five-year average.

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 27 Bcf to 55 Bcf, with a median withdrawal of 43 Bcf. The price of the Nymex futures contract for May 2017 delivery at Henry Hub decreased 3¢/MMBtu to $3.16/MMBtu in 1,454 trades at the release of the (WNGSR). Prices rebounded in subsequent trading, reaching $3.19/MMBtu within two minutes of the WNGSR release.

Temperatures are higher than normal in the Lower 48 states, on average, but lower than normal in some key demand areas during the storage report week. Temperatures in the Lower 48 states averaged 48°F, 2°F higher than the normal and 1°F lower than last year at this time. Temperatures were warmer than normal in most areas of the Lower 48 states, outside of the Northeast, Middle and South Atlantic, and parts of the Midwest. In particlar, 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 33°F, 5°F lower than the normal and 7°F lower than last year at this time, and temperatures in the Middle Atlantic Census division averaged 36°F, 4°F lower than the normal and 7°F lower than last year at this time. Temperatures in the East North Central Census division averaged 38°F, 1°F lower than the normal and 5°F lower than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook