Natural Gas

Overview:

(For the Week Ending Wednesday, April 19, 2017)

• Natural gas spot price movements around the United States were mixed this report week (Wednesday, April 12 to Wednesday, April 19). The Henry Hub spot price rose from $2.99 per million British thermal units (MMBtu) last Wednesday to $3.12/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the May 2017 contract price was flat Wednesday to Wednesday at $3.185/MMBtu.
• Net injections to working gas totaled 54 Bcf for the week ending April 14. Working natural gas stocks are 2,115 Bcf, which is 15% less than the year-ago level and 15% more than the five-year (2012–16) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 13¢, averaging $6.50/MMBtu for the week ending April 19. The price of natural gasoline and ethane both fell by 1%. The price of propane, butane, and isobutane rose by 4%, 5%, and 3%, respectively.
• According to Baker Hughes, for the week ending Friday, April 14, the natural gas rig count decreased by 3 to 162. The number of oil-directed rigs rose by 11 to 683. The total rig count increased by 8, and it now stands at 847.

more summary data

Prices/Supply/Demand:

Prices movements were mixed. This report week (Wednesday, April 12 to Wednesday, April 19), the Henry Hub spot price rose 13¢ from $2.99/MMBtu last Wednesday to $3.12/MMBtu yesterday. At the Chicago Citygate, prices were unchanged from last Wednesday at $2.96/MMBtu. Prices at PG&E Citygate in Northern California gained 3¢, up from $3.32/MMBtu last Wednesday to $3.35/MMBtu yesterday. The price at SoCal Citygate decreased 5¢ from $3.25/MMBtu last Wednesday to $3.20/MMBtu yesterday.

Prices in the Northeast exhibit wide oscillation. At the Algonquin Citygate, which serves Boston-area consumers, prices declined 9¢ from $3.03/MMBtu last Wednesday to $2.94/MMBtu yesterday. Algonquin prices displayed some large moves during the week, falling to a low of $2.62/MMBtu on Thursday, then increasing to a high of $3.44 on Tuesday as nuclear power plant outages in the Northeast contributed to increased demand for natural gas in the electricity sector. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 29¢ from $2.76/MMBtu last Wednesday to $3.05/MMBtu yesterday. Prices in New York also exhibited a wide range over the week, falling to a low of $2.44/MMBtu on Thursday.

Tennessee Zone 4 Marcellus spot prices decreased 10¢ from $2.65/MMBtu last Wednesday to $2.55/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 5¢ from $2.67/MMBtu last Wednesday to $2.72/MMBtu yesterday.

The Nymex contract was flat. At the Nymex, the price of the May 2017 contract was unchanged Wednesday to Wednesday at $3.185/MMBtu. The price of the 12-month strip averaging the May 2017 through April 2018 futures contracts climbed 1¢ to $3.385/MMBtu.

Supply falls slightly. According to data from PointLogic, the average total supply of natural gas fell by 1% compared with the previous week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 5% from last week.

Demand falls in residential/commercial sector. Total U.S. consumption of natural gas fell by 6% compared with the previous report week, according to data from PointLogic. Power burn climbed by 6% week over week, and was the only sector where demand increased. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 28%, as temperatures exceeded seasonal norms in much of the nation. Natural gas exports to Mexico decreased 24%, with maintenance on the NET Mexico Pipeline continuing to restrict export flows.

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, 4% lower than in the previous week. Four vessels (combined LNG-carrying capacity of 14.6 Bcf) departed Sabine Pass last week (Thursday to Wednesday) and one vessel (LNG-carrying capacity of 3.8 Bcf) was loading at the terminal on Wednesday, April 19.

more price data

Storage:

Warmer temperatures result in higher than average net injections into working gas storage. Net injections into storage totaled 54 Bcf, compared with the five-year (2012–16) average net injection of 35 Bcf and last year's net injections of 6 Bcf during the same week. Working gas stocks total 2,115 Bcf, which is 282 Bcf more than the five-year average and 368 Bcf less than last year at this time.

The East and Midwest regions post net injections for the first time this year. Net injections occurred in all regions of the Lower 48 states for the first time in 2017. Moreover, net injections topped the five-year average in each region except the Pacific region. Net injections in the East and Midwest regions totaled 23 Bcf, or 9 Bcf more the five-year average for the storage week. The South Central region totaled 26 Bcf net injections, 8 Bcf more than the five-year average for this time of year. Net injections of 2 Bcf in the Pacific region were 1 Bcf lower than its five-year average.

Working gas levels are 15% lower than last year's record levels, but well ahead of the five-year average. Working gas levels are 368 Bcf, or 15%, lower than last year's levels at this time. This year-over-year deficit prevails in each of the regions in the Lower 48 states. The East region has the largest year-over-year deficit of 132 Bcf, followed by the South Central region at 130 Bcf. The Midwest and Pacific regions are 51 Bcf and 48 Bcf lower than last year's levels, respectively. In contrast, working gas levels are 282 Bcf higher than the five-year average in the Lower 48 states and are higher than the five-year average in all regions except the East and the Pacific regions, which are 60 Bcf and 14 Bcf lower than the five-year average, respectively. The South Central region accounts for 221 Bcf of the surplus compared to the five-year average, and the Midwest region is 112 Bcf higher than the five-year average.

The January futures price continues to trade at a premium over the current spot price. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.08/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.64/MMBtu, a difference of 56¢. The premium was 98¢ a year ago. The price premium provides incentives for continued injections of natural gas into storage.

Reported net injections are close to the high end of market expectations for the week. According to the Bloomberg survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 41 Bcf to 55 Bcf, with a median of 49 Bcf. Prices of the Nymex futures contract for May 2017 delivery at Henry Hub decreased 1¢/MMBtu to $3.16/MMBtu in 369 trades four seconds after the release of the Weekly Natural Gas Storage Report (WNGSR). Prices rebounded in subsequent trading, reaching $3.17/MMBtu.

Temperatures remain higher than normal in the Lower 48 states on average. Temperatures in the Lower 48 states averaged 56°F, 4°F higher than the normal and 6°F higher than last year at this time. Temperatures were warmer than normal in most areas of the Lower 48 states outside of the Pacific Census division. Temperatures in the Pacific Census division averaged 54°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