Natural Gas

Overview:

(For the Week Ending Wednesday, June 21, 2017)

• Natural gas spot prices rose at most locations this report week (Wednesday, June 14 to Wednesday, June 21). However, the Henry Hub spot price fell from $2.90 per million British thermal units (MMBtu) last Wednesday to $2.88/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the July 2017 contract price fell 4¢ from $2.933/MMBtu last Wednesday to $2.893/MMBtu yesterday.
• Net injections to working gas totaled 61 billion cubic feet (Bcf) for the week ending June 16. Working natural gas stocks are 2,770 Bcf, which is 10% less than the year-ago level and 8% more than the five-year (2012–16) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 10¢, averaging $5.64/MMBtu for the week ending June 21. The price of natural gasoline, ethane, butane, and isobutane all fell by 2%, while the price of propane fell by 1%.
• According to Baker Hughes, for the week ending Friday, June 16, the natural gas rig count increased by 1 to 186, which is 100 rigs more than last year at this time. The number of oil-directed rigs rose by 6 to 747. The total rig count increased by 6, and it now stands at 933.

more summary data

Prices/Supply/Demand:

Spot prices rise across most of the country. This report week (Wednesday, June 14 to Wednesday, June 21), the Henry Hub spot price fell 2¢ from $2.90/MMBtu last Wednesday to $2.88/MMBtu yesterday. At the Chicago Citygate, prices increased 5¢ from $2.75/MMBtu last Wednesday to $2.80/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 13¢, up from $3.06/MMBtu last Wednesday to $3.19/MMBtu yesterday. The price at SoCal Citygate increased 93¢ from $3.06/MMBtu last Wednesday to $3.99/MMBtu yesterday, as a heatwave increased cooling demand west of the Rockies.

East coast prices rise while Marcellus prices remain fairly flat. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 73¢ from $2.12/MMBtu last Wednesday to $2.85/MMBtu yesterday. Temperatures in New England rose from below-normal temperatures on Thursday to above-normal temperatures over the weekend, and they remained elevated. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 25¢ from $2.11/MMBtu last Wednesday to $2.36/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices increased 1¢ from $1.69/MMBtu last Wednesday to $1.70/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 1¢ from $1.82/MMBtu last Wednesday to $1.83/MMBtu yesterday.

Nymex price falls slightly. At the Nymex, the price of the July 2017 contract decreased 4¢, from $2.933/MMBtu last Wednesday to $2.893/MMBtu yesterday. The price of the 12-month strip averaging July 2017 through June 2018 futures contracts declined 2¢ to $3.002/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 77.2 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 5% from last week, as the Alliance Pipeline into Chicago returned to full service after a four-day service reduction. The service reduction was a response to heavy rainstorms in Alberta and British Columbia, which led to emergency inspections on the pipeline.

Demand rises. Total U.S. consumption of natural gas rose by 2% compared with the previous report week, according to data from PointLogic. Power burn climbed by 5% week over week as the West experienced temperatures that averaged 10 degrees Fahrenheit or more above seasonal norms on some days. Industrial sector consumption stayed constant, averaging 19.6 Bcf/d. In the residential and commercial sectors, consumption also remained at last week's levels, averaging 6.8 Bcf/d. Natural gas exports to Mexico averaged 7% lower than the previous period, with maintenance reducing flows on the Los Ramones II pipeline.

U.S. liquefied natural gas (LNG) exports decrease. With the approach of Tropical Storm Cindy, which is expected to make a landfall near Sabine Pass on Thursday according to National Oceanic and Atmospheric Administration, the number of LNG vessels loading at Sabine Pass decreased week over week. Three vessels (combined LNG-carrying capacity of 11 Bcf) departed Sabine Pass last week (Thursday to Wednesday).

more price data

Storage:

Weekly net injections fall below the five-year average. Net injections into storage totaled 61 Bcf, compared with the five-year (2012–16) average net injection of 82 Bcf and last year's net injections of 63 Bcf during the same week. Working gas stocks total 2,770 Bcf, which is 207 Bcf more than the five-year average and 324 Bcf less than last year at this time.

Warmer than normal temperatures lead to net withdrawals from working gas storage in the salt dome facilities in the South Central region. Net withdrawals of 5 Bcf were reported in the South Central salt region—the first weekly net withdrawal reported in the region since March 24, prior to the beginning of the injection season. Warmer than normal temperatures in the region likely contributed to increased electric generation demand for natural gas, resulting in withdrawals of natural gas from storage. Because natural gas salt dome facilities possess high deliverability and are thus able to cycle through their inventories multiple times a year, withdrawals from storage in the South Central region are not uncommon during the summer.

Net injections into working gas storage are below the five-year average in most regions of the Lower 48 states. Net injections fell below the five-year average in all regions outside the Mountain region, where net injections were 1 Bcf above average. The South Central region was 12 Bcf below the five-year average, where salt facilities fell 8 Bcf short of the five-year average and the nonsalt facilities 4 Bcf below the five-year average. The East and Midwest regions were 4 and 5 Bcf below the five-year average, respectively, and the Pacific region was 1 Bcf below the five-year average.

The January futures price is trading at a premium over the current spot price, but it 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 $2.98/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.33/MMBtu, a difference of 35¢. The premium was 82¢ a year ago. In comparison, the average natural gas spot price at the Henry Hub was $2.98/MMBtu, 2¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 11¢ lower than the front-month contract.

Reported net implied flows into storage are in the upper end of the range of market expectations for the week. According to the June 21 issue of The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 51 Bcf to 64 Bcf with a median of 57 Bcf. Prices of the Nymex futures contracts for July 2017 delivery at Henry Hub decreased 5¢ to $2.86/MMBtu in 1,051 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices recovered somewhat in subsequent trading, climbing to $2.89/MMBtu.

Warmer than normal temperatures lead to smaller than normal injections into storage. Temperatures in the Lower 48 states averaged 73°F, 3°F higher than the normal and 2°F higher than last year at this time. Cooling degree days (CDD) in the Lower 48 states totaled 64, compared to 51 last year and compared to a normal of 46. Temperatures in the East South Central Census division averaged 76°F, 2°F higher than the normal and the same as last year at this time, and temperatures in the West South Central Census division averaged 80°F, 1°F higher than the normal and 1°F lower than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook