Natural Gas

‹ See the most recent Natural Gas Weekly Update

Natural Gas Weekly Update

for week ending May 31, 2017   |  Release date:  June 1, 2017   |  Next release:  June 8, 2017   |   Previous weeks


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

In the News:

The United Kingdom's largest storage facility will be unavailable for injections until May 2018 or later

The United Kingdom imported 33% more natural gas (on a net basis) in the winter of 2016–17 compared with the winter 2015–16, in part, because of the lower natural gas withdrawals from the Rough storage facility. Since 2016, Rough, the United Kingdom's largest storage facility—accounting for about 70% of the country's total storage capacity—has been unavailable for injections. Injections at the facility were stopped in the first quarter of 2016 in response to safety concerns raised by Centrica's well-testing program, which revealed potential containment failures in a number of wells. Injections into the facility will not resume until May 2018 at the earliest, according to the facility operator, Centrica. Only limited withdrawals from the facility will be allowed during this period.

Last winter (December–February), the United Kingdom increased imports of natural gas via the Interconnector with Belgium, which averaged 0.8 billion cubic feet per day (Bcf/d) compared with 0.02 Bcf/d in the winter 2015–16. The United Kingdom also received supplies from Norway, which averaged 4.6 Bcf/d last winter compared with 3.4 Bcf/d in the winter 2015–16. These increases offset declines in liquefied natural gas (LNG) imports and pipeline imports from the Netherlands, which fell by 56% and 31%, respectively, during the winter 2016–17 compared with the previous winter, according to data from the U.K. Department of Energy & Climate Change.

The depletion of stocks at the Rough storage facility may have an impact on short-term natural gas prices in the United Kingdom, particularly during periods of peak winter demand. Withdrawals from storage meet about 6% of the total natural gas demand in the United Kingdom. Next winter, increased natural gas imports may be needed to compensate for the loss of natural gas supply from Rough storage.

Investment in storage capacity in the United Kingdom has been minimal in recent years because of low forward price differentials between winter and summer months, which drive seasonal storage revenue. While several companies have proposed building additional storage capacity in the United Kingdom, no new facilities are expected to be available for some time. In 2015, Halite Energy proposed to build a new storage facility with a capacity of 21 Bcf, but only limited progress has been made on this project. In March 2017, Ineos received regulatory approval to build a new natural gas storage facility with a capacity of 18 Bcf in Cheshire, adjacent to the existing gas storage facilities. However, the construction of the facility may take up to six years, according to Ineos.

Overview:

(For the Week Ending Wednesday, May 31, 2017)

  • Natural gas spot prices fell at most locations this report week (Wednesday, May 24 to Wednesday, May 31). The Henry Hub spot price fell from $3.11 per million British thermal units (MMBtu) last Wednesday to $3.00/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the June 2017 contract expired Friday at $3.236/MMBtu. The July 2017 contract price decreased to $3.071/MMBtu, down 23¢ Wednesday to Wednesday.
  • The implied net flow to working gas totaled 85 billion cubic feet (Bcf) for the week ending May 26. The week-over-week net change in working gas was 81 Bcf, and the 4 Bcf difference resulted from a non-flow inventory adjustment that reduced working gas levels by 4 Bcf for the report week. Working natural gas stocks are 2,525 Bcf, which is 13% less than the year-ago level and 10% more than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 9¢, averaging $6.17/MMBtu for the week ending May 31. The price of natural gasoline, ethane, butane, and isobutane fell by 3%, 2%, 3%, and 1%, respectively. The price of propane remained flat week over week.
  • According to Baker Hughes, for the week ending Friday, May 26, the natural gas rig count increased by 5 to 185. The number of oil-directed rigs rose by 2 to 722. The total rig count increased by 7, and it now stands at 908.

more summary data

Prices/Supply/Demand:

Prices fall across the country. This report week (Wednesday, May 24 to Wednesday, May 31), the Henry Hub spot price fell 11¢ from $3.11/MMBtu last Wednesday to $3.00/MMBtu yesterday. At the Chicago Citygate, prices decreased 25¢ from $3.03/MMBtu last Wednesday to $2.78/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 16¢, down from $3.38/MMBtu last Wednesday to $3.22/MMBtu yesterday. The price at SoCal Citygate decreased 16¢ from $3.25/MMBtu last Wednesday to $3.09/MMBtu yesterday. Cooler-than-normal temperatures in the Midwest and Northeast reduced power demand and contributed to lower prices.

Northeast prices decrease. At the Algonquin Citygate, which serves Boston-area consumers, prices fell 55¢ from $2.95/MMBtu last Wednesday to $2.40/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 32¢ from $2.90/MMBtu last Wednesday to $2.58/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices decreased 38¢ from $2.53/MMBtu last Wednesday to $2.15/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 43¢ from $2.66/MMBtu last Wednesday to $2.23/MMBtu yesterday.

July Nymex price falls. At the Nymex, the June 2017 contract expired Friday at $3.236/MMBtu, up 3¢ from last Wednesday. With forecasts of further moderate weather through mid-June, possibly delaying the onset of summer cooling demand, the July 2017 contract decreased to $3.071/MMBtu, down 23¢ from last Wednesday to yesterday. The price of the 12-month strip averaging July 2017 through June 2018 futures contracts declined 17¢ to $3.132/MMBtu.

Supply remains constant. According to data from PointLogic, the average total supply of natural gas remained the same as the previous report week, averaging 76.8 Bcf/d. Dry natural gas production grew by 1% compared with the previous report week, while average net imports from Canada decreased by 3%.

Demand falls. Total U.S. consumption of natural gas fell by 5% compared with the previous report week, according to data from PointLogic. Power burn declined by 6% week over week as moderate temperatures in parts of the country limited cooling demand. Power burn was also 19% below the same week last year. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 11%, but was still 16% higher than the same week last year. Natural gas exports to Mexico decreased 6%.

U.S. LNG exports remain flat week over week. Four vessels (combined LNG-carrying capacity of 14.4 Bcf) departed Sabine Pass last week (Thursday to Wednesday). In May 2017, a total of 18 cargoes were exported from Sabine Pass, totaling approximately 61 Bcf, a new monthly record.

more price data

Storage:

EIA reports reclassifications from working gas to base gas. Four Bcf of natural gas were reclassified from working gas to base gas storage in the Mountain region for the report week. Excluding the effects of this non-flow inventory adjustment results in implied flows into storage of 85 Bcf. The implied net flow into the Mountain region totaled 4 Bcf compared with the 0 Bcf week-over-week net change in the working gas level. Natural gas inventory reclassifications often occur as the result of engineering studies or reassessments of the operational capabilities of the storage facility.

Smaller-than-average net injections into working gas storage reported in all regions of the Lower 48 states. Net injections into storage totaled 81 Bcf compared with the five-year (2012–16) average net injection of 97 Bcf and last year's net injections of 80 Bcf during the same week. Net injections were 5 Bcf lower than the five-year average in the South Central salt region, where warmer-than-normal temperatures likely contributed to increased cooling-related demand for natural gas. Net injections in the Midwest and Mountain regions also fell 5 Bcf lower than the five-year average. However, in the Mountain region the implied flows into storage were 4 Bcf, excluding the inventory adjustment.

Working gas levels are 13% lower than last year's record levels, but well ahead of the five-year average. Working gas stocks total 2,525 Bcf, which is 225 Bcf more than the five-year average and 370 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 134 Bcf. The East region has the largest deficit in relative terms, at 114 Bcf, 21% lower than last year's stock level. The Midwest region is 66 Bcf lower than last year at this time, and the Pacific region is 45 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 60 Bcf and 24 Bcf lower than their five-year averages, respectively. The South Central region accounts for 192 Bcf of the surplus compared with the five-year average, and the Midwest region is 89 Bcf more than the five-year average.

The January futures price is trading at a premium over the current spot price, but trades at a discount with the near-month contract. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.13/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.62/MMBtu, a difference of 49¢. The premium was $1.18 a year ago. In comparison, the average natural gas spot price at the Henry Hub during the most recent storage week was only 11¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 18¢ lower than the front-month contract.

Reported net implied flows into storage are just above 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 69 Bcf to 84 Bcf with a median of 76 Bcf. Prices of the Nymex futures contracts for July 2017 delivery at Henry Hub decreased 3¢ to $3.04/MMBtu in 2,237 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices varied around $3.03/MMBtu in subsequent trading.

Temperatures were close to normal in most parts of the Lower 48 states and topped 70°F in key natural gas consuming areas in the South Central region. Temperatures in the Lower 48 states averaged 64°F, the same as the normal and 2°F higher than last year at this time. However, temperatures exhibited considerable variation compared with normal levels across the Lower 48 states. Temperatures in the Northeast matched normal levels, where temperatures in the New England Census division averaged 59°F and temperatures in the Middle Atlantic Census division averaged 61°F. Temperatures in the South Atlantic Census division averaged 73°F, which was 3°F higher than the normal and 6°F higher than last year at this time. Temperatures in the East South Central Census division averaged 70°F, which was 1°F higher than the normal and 4°F higher than last year at this time. In contrast, temperatures in the West South Central Census division averaged 72°F, which was 2°F lower than the normal and the same as last year at this time. Temperatures in the Mountain Census division were also lower than normal, averaging 60°F, which was 2°F lower than the normal. Temperatures in the Pacific Census division averaged 68°F, which was 6°F higher than the normal and 9°F higher than last year at this time.

more storage data

See also:

Daily natural gas stocks at Rough storage facility


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
25-May
Fri,
26-May
Mon,
29-May
Tue,
30-May
Wed,
31-May
Henry Hub
3.06
3.11
Holiday
3.05
3.00
New York
2.71
2.36
Holiday
2.60
2.58
Chicago
3.01
2.96
Holiday
2.90
2.78
Cal. Comp. Avg.*
3.08
3.00
Holiday
2.95
2.89
Futures ($/MMBtu)
June Contract
3.184
3.236
Holiday
Expired
Expired
July Contract
3.275
3.310
Holiday
3.145
3.071
August Contract
3.317
3.345
Holiday
3.181
3.109
*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: (5/25/17 - 5/31/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
80.2
79.8
80.3
Dry production
71.3
70.9
71.6
Net Canada imports
5.5
5.7
6.0
LNG pipeline deliveries
0.0
0.0
0.0
Total supply
76.8
76.6
77.6

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: (5/25/17 - 5/31/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
53.5
56.5
57.6
    Power
24.0
25.7
29.7
    Industrial
19.9
20.0
19.7
    Residential/commercial
9.6
10.8
8.2
Mexico exports
4.0
4.2
3.6
Pipeline fuel use/losses
6.0
6.4
6.5
LNG pipeline receipts
1.6
2.1
0.5
Total demand
65.1
69.2
68.2

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 26, 2017
Change from
 
last week
last year
Oil rigs
722
0.3%
128.5%
Natural gas rigs
185
2.8%
112.6%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, May 26, 2017
Change from
 
last week
last year
Vertical
77
1.3%
67.4%
Horizontal
766
0.9%
143.9%
Directional
65
-1.5%
47.7%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-05-26
2017-05-19
change
East
419
390
29
Midwest
585
562
23
Mountain
    166  C
166
0
Pacific
258
250
8
South Central
1,097
1,076
21
Total
    2,525 C
2,444
81
Source: U.S. Energy Information Administration
C=Reclassification
Working gas in underground storage
Historical comparisons
Year ago
(5/26/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
533
-21.4
479
-12.5
Midwest
651
-10.1
496
17.9
Mountain
177
-6.2
137
21.2
Pacific
303
-14.9
282
-8.5
South Central
1,231
-10.9
905
21.2
Total
2,895
-12.8
2,300
9.8
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending May 25)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
49
2
5
9
7
9
Middle Atlantic
35
-1
-4
9
1
8
E N Central
48
6
5
1
-14
-2
W N Central
72
35
38
0
-19
-11
South Atlantic
9
-5
-16
62
15
20
E S Central
9
-4
-9
47
9
19
W S Central
6
4
-1
53
-13
-3
Mountain
61
11
13
29
3
13
Pacific
8
-24
-35
27
18
24
United States
33
1
-3
28
1
10
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending May 25, 2017

Mean Temperature (F) 7-Day Mean ending May 25, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending May 25, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending May 25, 2017

Source: NOAA National Weather Service