Natural Gas

Overview:

(For the Week Ending Wednesday, May 24, 2017)

• Natural gas spot prices fell at most locations this report week (Wednesday, May 17 to Wednesday, May 24). The Henry Hub spot price fell from $3.16 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 2¢ from $3.192/MMBtu last Wednesday to $3.209/MMBtu yesterday.
• Net injections to working gas totaled 75 billion cubic feet (Bcf) for the week ending May 19. Working natural gas stocks are 2,444 Bcf, which is 13% less than the year-ago level and 11% more than the five-year (2012–16) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 16¢, averaging $6.25/MMBtu for the week ending May 24. The spot price of ethane fell by 2%. The spot prices of natural gasoline, propane, butane, and isobutane all rose by 4%, 5%, 1%, and 3%, respectively.
• According to Baker Hughes, for the week ending Friday, May 19, the natural gas rig count increased by 8 to 180. The number of oil-directed rigs rose by 8 to 720. The total rig count increased by 16, and it now stands at 901.

more summary data

Prices/Supply/Demand:

Prices fall. This report week (Wednesday, May 17 to Wednesday, May 24), the Henry Hub spot price fell 5¢ from $3.16/MMBtu last Wednesday to $3.11/MMBtu yesterday. Despite a price fall week over week, prices are substantially higher than last year at this time. Yesterday's Henry Hub price, for example, was 63% higher than a year ago, when it stood at $1.91/MMBtu. Last year's prices were historically low largely because of downward pressure from record high storage stocks following an unusually warm winter.

At the Chicago Citygate, prices decreased 2¢ to $3.03/MMBtu yesterday. Prices at PG&E Citygate in Northern California gained 3¢ to $3.38/MMBtu yesterday. The price at SoCal Citygate rose 8¢ to $3.25/MMBtu yesterday.

Algonquin price falls significantly. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $1.22 from $4.17/MMBtu last Wednesday to $2.95/MMBtu yesterday. Prices were elevated last Wednesday with hot weather pushing up power demand and with a capacity reduction at Algonquin's Burrillville Compressor Station in Rhode Island, which may last for about two weeks.

At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 28¢ from $3.18/MMBtu last Wednesday to $2.90/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices decreased 15¢ to $2.53/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 11¢ to $2.66/MMBtu yesterday.

June Nymex increases slightly. At the Nymex, the price of the June 2017 contract increased 2¢, from $3.192/MMBtu last Wednesday to $3.209/MMBtu yesterday. The price of the 12-month strip, which averages June 2017 through May 2018 futures contracts, climbed 1¢ to $3.323/MMBtu.

Supply remains flat. According to data from PointLogic, the average total supply of natural gas remained the same as the previous report week, averaging 76.6 Bcf/d. Dry natural gas production remained constant week over week. Net imports from Canada remained the same as last week, averaging 5.7 Bcf/d.

Demand remains flat. Total U.S. consumption of natural gas was unchanged from last week, averaging 56.5 Bcf/d according to data from PointLogic. An increase in power burn was offset by a decrease in residential/commercial sector consumption. Power burn climbed by 5% week over week. Industrial sector consumption stayed constant, averaging 20.0 Bcf/d. In the residential/commercial sector, consumption declined by 11%. Natural gas exports to Mexico increased 1%.

U.S. LNG exports remain flat week over week. Three vessels (combined LNG-carrying capacity of 10.2 Bcf) departed Sabine Pass last week (Thursday to Wednesday) and one vessel (LNG-carrying capacity of 3.6 Bcf) was loading at the terminal on Wednesday.

more price data

Storage:

Smaller-than-average net injections into working gas storage reported in most regions of the Lower 48 states. Net injections into storage totaled 75 Bcf, compared with the five-year (2012–16) average net injection of 90 Bcf and last year's net injections of 71 Bcf during the same week. The largest shortfalls in net injections, compared with the five-year average, occurred in the South Central salt region, where warmer-than-normal temperatures likely contributed to increased cooling-related demand for natural gas. The South Central salt region reported net injections of 1Bcf—9 Bcf lower than the five-year average of 10 Bcf for the report week. The East, Midwest, and Pacific regions also reported net injections that fell short of the five-year average. The East and Midwest regions reported net injections that were 4 Bcf and 3 Bcf lower than the five-year average, respectively. The Pacific region also fell 3 Bcf lower than the five-year average for the week. The Mountain and South Central nonsalt regions were the only regions that posted net injections topping their respective five-year averages, with the Mountain region exceeding its five-year average by 2 Bcf and the South Central nonsalt region 3 Bcf higher than its five-year average.

Working gas levels are 13% lower than last year's record levels, but well ahead of the five-year average. Working gas stocks total 2,444 Bcf, which is 241 Bcf more than the five-year average and 371 Bcf less than last year 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, at 138 Bcf. The East region has the largest deficit in relative terms, at 118 Bcf, 23% lower than last year's stock level. The Midwest region is 64 Bcf lower than last year at this time, and the Pacific region is 47 Bcf lower than last year's level. In contrast, working gas levels are higher than the five-year averages in all regions except the East and the Pacific regions, which are 61 Bcf and 23 Bcf lower than their five-year averages, respectively. The South Central region accounts for 197 Bcf of the surplus compared with the five-year average, and the Midwest region is 94 Bcf higher than the five-year average. The deficit compared with last year's level narrowed this storage week in every region outside of the East and Midwest.

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 $3.21/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.64/MMBtu, a difference of 43¢. The premium was $1.07 a year ago. During the most recent storage week, the average natural gas spot price at the Henry Hub was 7¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 12¢ lower than the front-month contract. Nonetheless, the price premium continues to provide incentives for injections of natural gas into storage.

Reported net injections are in the range of market expectations for the week. According to the May 24 issue of The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 65 Bcf to 79 Bcf, with a median of 70 Bcf. Prices of the Nymex futures contracts for June 2017 delivery at Henry Hub decreased 3¢ to $3.17/MMBtu in 189 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Trading on the June 2017 contract was light, likely because it will expire tomorrow, May 26. Trading on the July 2017 contract was considerably more active with 1,207 contracts changing hands. Prices for the July contract also fell about 3¢/MMBtu at the release, down to $3.27/MMBtu. Prices varied in subsequent trading.

Temperatures were higher than normal in most parts of the Lower 48 states, led by key natural gas consuming areas in the South Central region. Temperatures in the Lower 48 states averaged 64°F, 2°F higher than normal and 3°F higher than last year at this time. Temperatures were higher than normal in most areas east of the Rocky Mountains. In particular, the East and West South Central Census divisions, which can have considerable gas-fired electric generation demand for natural gas, reported warmer-than-normal temperatures. Temperatures in the East South Central Census division averaged 71°F, 4°F higher than the normal and 6°F higher than last year at this time, and temperatures in the West South Central Census division averaged 74°F, 2°F higher than the normal and 2°F higher than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook