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Natural Gas Weekly Update

for week ending May 10, 2017   |  Release date:  May 11, 2017   |  Next release:  May 18, 2017   |   Previous weeks


JUMP TO: In The News | Overview | Prices/Supply/Demand | Storage

In the News:

SoCalGas updates assessment of summer reliability

On April 28, Southern California Gas Company (SoCalGas) provided an update to the California Independent System Operator (CAISO), the California Energy Commission (CEC), and the California Public Utilities Commission (CPUC) about its ability to safely and reliably serve its customers in Southern California over the coming summer and winter. In this update, SoCalGas expressed concerns regarding expectations of warmer-than-normal summer temperatures combined with lower-than-average natural gas storage levels on its system, largely a result of operating restrictions on SoCalGas's Aliso Canyon field. Stakeholders—including the CAISO, the CEC, the Los Angeles Department of Water and Power, and the CPUC—will hold a Joint Agency Workshop on Energy Reliability in Southern California on May 22 to discuss summer energy reliability in Southern California.

On October 23, 2015, SoCalGas detected a leak at Aliso Canyon, an underground natural gas storage facility with a capacity of 86 billion cubic feet (Bcf), or 64% of SoCalGas's total storage capacity. In response, the California legislature placed a moratorium on natural gas injection into Aliso Canyon. On June 2, 2016, CPUC authorized SoCalGas to withdraw the remaining 15 Bcf at Aliso Canyon (though storage injections into that field were not authorized and would require additional regulatory approval). SoCalGas's total natural gas inventories remained well below five-year minimums for the second half of 2016. As of May 10, SoCalGas's inventory stands at 22 Bcf (35%) lower than this time last year, 44 Bcf (51%) lower than the five-year (2011–15) average, and 7.7 Bcf (16%) lower than the five-year minimum.

The share of California's electric power generated from natural gas has remained below five-year (2012–16) minimums for most of 2017. However, in early May, with unseasonably warm weather, a sharp increase in the share of natural gas used to meet power demand occurred. The National Oceanic and Atmospheric Agency (NOAA) issued a forecast at the end of April for a warmer-than-normal summer, when demand for electricity—driven by air-conditioning use—is typically at its highest.

Increased hydroelectric output in the CAISO electricity market, along with continued increases from grid-connected solar, has offset lower natural gas generation so far in 2017. Through May 8 of this year, California has averaged 38 inches of snow water equivalent, while 2016 saw 19 inches over the same time period. With record precipitation in California, hydroelectric power generation is expected to increase this year. In addition, in the first 4 months of 2017, average daily solar output has increased by 27% over the same time period for 2016, according to Energy GPS data.

EIA publishes a summer and winter version of its daily energy dashboard, the Southern California Daily Energy Report. The dashboard provides daily statistics on electric power loads, natural gas flows, SoCalGas send-out, temperatures, changes in SoCalGas inventories, and spot natural gas and electric power prices.

Overview:

(For the Week Ending Wednesday, May 10, 2017)

  • Natural gas spot prices rose at most locations this report week (Wednesday, May 3 to Wednesday, May 10). The Henry Hub spot price rose from $3.09 per million British thermal units (MMBtu) last Wednesday to $3.11/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the June 2017 contract price rose 6¢ from $3.228/MMBtu last Wednesday to $3.292/MMBtu yesterday.
  • Net injections to working gas totaled 45 Bcf for the week ending May 5. Working natural gas stocks are 2,301 Bcf, which is 14% lower than the year-ago level and 14% higher than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 3¢, averaging $5.99/MMBtu for the week ending May 10. The prices of natural gasoline, butane, and isobutane fell by 2%, 1%, and 3%, respectively. The prices of ethane and propane rose by 3% and 2%, respectively.
  • According to Baker Hughes, for the week ending Friday, May 5, the natural gas rig count increased by 2 to 173. The number of oil-directed rigs rose by 6 to 703. The total rig count increased by 7, and now stands at 877.

more summary data

Prices/Supply/Demand:

Prices mostly rise. This report week (Wednesday, May 3 to Wednesday, May 10), the Henry Hub spot price rose 2¢ from $3.09/MMBtu last Wednesday to $3.11/MMBtu yesterday. At the Chicago Citygate, prices increased 14¢ to $3.08/MMBtu yesterday. At almost every trading point, prices increased substantially between Tuesday and yesterday, jumping 8¢ at Henry Hub, for example.

As with Henry Hub, West Coast prices increased between Tuesday and yesterday, such as SoCal Citygate, which jumped 10¢. The SoCal Citygate price rose 6¢ Wednesday to Wednesday, settling at $3.23/MMBtu yesterday. Prices at PG&E Citygate in Northern California gained 15¢ to $3.42/MMBtu yesterday.

Northeast prices mostly rise outside of Boston. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 13¢ to $2.98/MMBtu yesterday. In contrast, at the Algonquin Citygate, which serves Boston-area consumers, prices went down 12¢ from $3.29/MMBtu last Wednesday to $3.17/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices advanced 7¢ to $2.74/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 12¢ to $2.88/MMBtu yesterday.

June contract prices rise. At the Nymex, the price of the June 2017 contract increased 6¢, from $3.228/MMBtu last Wednesday to $3.292/MMBtu yesterday. The price of the 12-month strip, averaging June 2017 through May 2018 futures contracts, climbed 6¢ to $3.381/MMBtu.

U.S. supply increases slightly. According to data from PointLogic, the average total supply of natural gas rose by 1% compared with the previous week. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week.

This report week is the second week that net imports from Canada have increased because of reduced exports on the Vector Pipeline, which begins southwest of Chicago and runs to Dawn Hub in Ontario. Vector is under Phase 2 of its maintenance project, which is projected to last through May 18, during which time flows will be highly restricted. This maintenance will allow Vector to connect with the Rover Pipeline, which was part of a batch of projects certificated by FERC earlier this year.

Demand falls slightly. Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from PointLogic. Week over week, power burn declined by 8, industrial sector consumption stayed constant at 20.5 Bcf/d, and residential/commercial sector demand increased by 11%. Natural gas exports to Mexico decreased 3%.

U.S. LNG exports increased. Four vessels (combined LNG-carrying capacity of 14.2 Bcf) departed Sabine Pass last week (Thursday to Wednesday), compared with three vessels last report week.

more price data

Storage:

Elevated consumption of natural gas likely results in smaller-than-average net injections into working gas storage. Net injections into storage totaled 45 Bcf, compared with the five-year (2012–16) average net injection of 73 Bcf and last year's net injections of 58 Bcf during the same week. Net injections fell below the five-year average in the Midwest and South Central regions by 14 Bcf and 16 Bcf, respectively, on the week. Continued heating demand for natural gas in the Midwest region likely depressed net injections of natural gas compared with the five-year average, while warmer temperatures in the southern parts of the Lower 48 states likely resulted in some increases in cooling demand, and consequently, smaller-than-normal injections for the report week. Net injections in the Pacific region also fell to 3 Bcf lower than the five-year average, likely as a result of the continued injections restrictions at Aliso Canyon. The weekly net change in the East region topped the five-year average by 3 Bcf and the Mountain region matched its five-year average net injection of 2 Bcf for the week.

Working gas levels are 14% lower than last year's record levels, but well ahead of the five-year average. Working gas levels are 372 Bcf lower than last year's levels at this time. This year-over-year deficit prevails in each of the regions of the Lower 48 states. The South Central region has the largest year-over-year deficit—145 Bcf. The East region has the largest deficit in relative terms, at 116 Bcf, 25% lower than last year's stock level. The Midwest region is 56 Bcf lower than last year at this time and the Pacific region is 49 Bcf lower than last year's level. In contrast, working gas levels are 275 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 46 Bcf and 19 Bcf lower than the five-year average, respectively. The South Central region accounts for 204 Bcf of the surplus compared with the five-year average, and the Midwest region is 106 Bcf higher than the five-year average.

The January futures price is trading at a premium over the current spot price, but the premium is well behind last year's level at this time. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.12/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.58/MMBtu, a difference of 46¢. The premium was $1.13/MMBtu a year ago. The price premium provides incentives for continued injections of natural gas into storage.

Reported net injections are lower than the range of market expectations for the week, prices on the Nymex rise in an early flurry of trading. According to the May 10, 2017, issue of The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 49 Bcf to 59 Bcf, with a median of 54 Bcf. Prices of the Nymex futures contracts for June 2017 delivery at Henry Hub increased 3¢/MMBtu to $3.37/MMBtu in 1,274 trades moments ahead of the release of the Weekly Natural Gas Storage Report (WNGSR). Another 928 contracts were traded at the release, with prices maintaining the higher price level. Prices varied in subsequent trading, increasing to $3.38/MMBtu.

Temperatures were higher-than-normal in most parts of the Lower 48 states, but significantly cooler-than-normal in the Midwest. Temperatures in the Lower 48 states averaged 60°F, 2°F higher than the normal and 3°F higher than last year at this time. Temperatures were significantly higher than normal in the key gas-consuming Northeast region, where the New England and Middle Atlantic Census Divisions were 6°F and 7°F, respectively, higher than normal. However, the East and West North Central Census Divisions were 3°F and 7°F lower than normal, respectively. The South Atlantic and East South Central also were significantly higher than normal, posting average temperatures of 72°F and 67°F, respectively, which suggests some cooling demand for natural gas in these regions.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
04-May
Fri,
05-May
Mon,
08-May
Tue,
09-May
Wed,
10-May
Henry Hub
3.07
3.07
3.03
3.03
3.11
New York
2.74
2.80
2.93
2.93
2.98
Chicago
2.96
2.96
2.92
2.94
3.08
Cal. Comp. Avg.*
2.99
2.95
2.92
2.96
3.06
Futures ($/MMBtu)
June Contract
3.186
3.266
3.172
3.227
3.292
July Contract
3.271
3.350
3.257
3.315
3.380
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (5/4/17 - 5/10/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.7
79.3
80.9
Dry production
70.8
70.4
72.0
Net Canada imports
6.3
6.0
5.9
LNG pipeline deliveries
0.0
0.0
0.2
Total supply
77.0
76.4
78.2

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline deliveries represent gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (5/4/17 - 5/10/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
57.2
57.7
59.2
    Power
22.7
24.7
23.9
    Industrial
20.5
20.4
20.5
    Residential/commercial
14.0
12.5
14.8
Mexico exports
4.0
4.1
3.6
Pipeline fuel use/losses
6.5
6.2
6.7
LNG pipeline receipts
2.3
2.1
0.5
Total demand
70.0
70.1
70.0

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline receipts represent pipeline deliveries to LNG export terminals.

Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, May 05, 2017
Change from
 
last week
last year
Oil rigs
703
0.9%
114.3%
Natural gas rigs
173
1.2%
101.2%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, May 05, 2017
Change from
 
last week
last year
Vertical
76
-1.3%
43.4%
Horizontal
734
0.5%
130.8%
Directional
67
6.3%
52.3%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-05-05
2017-04-28
change
East
350
325
25
Midwest
524
519
5
Mountain
155
153
2
Pacific
238
233
5
South Central
1,034
1,026
8
Total
2,301
2,256
45
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(5/5/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
466
-24.9
396
-11.6
Midwest
580
-9.7
418
25.4
Mountain
160
-3.1
126
23.0
Pacific
287
-17.1
257
-7.4
South Central
1,179
-12.3
830
24.6
Total
2,673
-13.9
2,026
13.6
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending May 04)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
59
-35
-65
4
4
4
Middle Atlantic
37
-42
-66
6
5
6
E N Central
101
18
2
0
-2
0
W N Central
119
46
20
0
-5
0
South Atlantic
11
-23
-11
62
37
12
E S Central
18
-12
8
32
18
2
W S Central
19
9
5
36
0
-3
Mountain
102
16
-12
14
1
9
Pacific
17
-34
-28
15
9
14
United States
56
-6
-16
22
10
6
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending May 04, 2017

Mean Temperature (F) 7-Day Mean ending May 04, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending May 04, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending May 04, 2017

Source: NOAA National Weather Service