Natural Gas

Overview:

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

• Natural gas spot prices rose at most locations this report week (Wednesday, July 12 to Wednesday, July 19). The Henry Hub spot price rose from $2.98 per million British thermal units (MMBtu) last Wednesday to $3.10/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the August 2017 contract price rose 8¢ from $2.985/MMBtu last Wednesday to $3.066/MMBtu yesterday.
• Net injections to working gas totaled 28 billion cubic feet (Bcf) for the week ending July 14. Working natural gas stocks are 2,973 Bcf, which is 9% less than the year-ago level and 5% more than the five-year (2012–16) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 24¢, averaging $6.09/MMBtu for the week ending July 19. The price of natural gasoline, ethane, propane, butane, and isobutane all rose, by 4%, 2%, 6%, 4%, and 5%, respectively.
• According to Baker Hughes, for the week ending Friday, July 14, the natural gas rig count decreased by 2 to 187. The number of oil-directed rigs rose by 2 to 765. The total rig count remained at 952.

more summary data

Prices/Supply/Demand:

Prices rise at most points again this week. This report week (Wednesday, July 12 to Wednesday, July 19), the Henry Hub spot price rose 12¢ from $2.98/MMBtu last Wednesday to $3.10/MMBtu yesterday. At the Chicago Citygate, prices increased 15¢ from $2.86/MMBtu last Wednesday to $3.01/MMBtu yesterday.

California prices are relatively higher compared with prices elsewhere in the country. Prices at PG&E Citygate in Northern California rose 7¢ to $3.37/MMBtu yesterday. The price at SoCal Citygate increased 3¢ to $3.20/MMBtu yesterday.

Yesterday, California utility regulators confirmed that it is safe to resume limited usage of Southern California Gas Company’s Aliso Canyon natural gas storage field, which had a major leak in late 2015. The field has been under regulatory review for nearly two years. The partial resumption of service at Aliso Canyon will provide additional natural gas service reliability to the region, as the field accounted for a large share of the regional storage sendout capacity.

Northeast prices rise significantly this week. At the Algonquin Citygate, which serves Boston-area consumers, prices went up $1.29 from $2.63/MMBtu last Wednesday to $3.92/MMBtu yesterday. Temperatures in the Northeast rose Tuesday and yesterday, pushing up demand for home cooling. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 18¢ to $3.23/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices increased 4¢ to $2.18/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 1¢ to $2.24/MMBtu yesterday.

Futures contract prices increase. At the Nymex, the price of the August 2017 contract increased 8¢, from $2.985/MMBtu last Wednesday to $3.066/MMBtu yesterday. The price of the 12-month strip averaging August 2017 through July 2018 futures contracts climbed 7¢ to $3.110/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 78.3 Bcf/d. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada decreased by 1% from last week.

Demand remains flat. Total U.S. consumption of natural gas was unchanged from last week, averaging 74.1 Bcf/d according to data from PointLogic. Power burn climbed by 2% week over week; industrial sector consumption stayed constant, averaging 19.7 Bcf/d; and residential and commercial sector consumption declined by 5%. Natural gas exports to Mexico increased 2%.

U.S. liquefied natural gas (LNG) exports remain flat week over week. Four vessels (combined LNG-carrying capacity of 14.3 Bcf) departed Sabine Pass last week (Thursday to Wednesday).

more price data

Storage:

Weekly net injections are below the five-year average. Net injections into storage totaled 28 Bcf for the week ending July 14, compared with the five-year (2012–16) average net injection of 59 Bcf and last year's net injections of 38 Bcf during the same week. The smaller-than-average net injections this week likely resulted from the warmer-than-normal temperatures that prevailed throughout most of the Lower 48 states, increasing cooling demand for natural gas. This pattern was most pronounced in the South Central region, where warmer-than normal temperatures resulted in withdrawals from storage totaling 8 Bcf compared with the five-year average net injection of 12 Bcf in the region. Working gas stocks total 2,973 Bcf, which is 141 Bcf more than the five-year average and 299 Bcf less than last year at this time.

So far in the 2017 refill season, net injections into working gas storage are lower than the five-year average in most regions of the Lower 48 states. Net injections into working gas are at 922 Bcf since March 31, 2017—the traditional beginning of the refill season—compared with the five-year average of 1,046 Bcf over the same period. Smaller-than-average net injections during the 2017 injection season were the result of high electric sector demand, which was caused by warmer-than-normal spring temperatures on average, relatively high levels of natural gas exports, and storage levels that were already above average at the start of the refill season. The East and Mountain regions were the only regions where net injections exceeded the five-year average. Cumulative net injections during the 2016 refill season totaled 794 Bcf by this time last year, which was also characterized by unusually high storage levels at the start of the 2016 refill season.

The January 2018 futures price is trading 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 $2.94/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.29/MMBtu, a difference of 35¢. The premium was 54¢ a year ago. The average natural gas spot price at the Henry Hub was 2¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 6¢ higher than the front-month contract.

Reported net implied flows into storage are below the median of analysts’ expectations. According to The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 25 Bcf to 43 Bcf with a median of 31 Bcf. Prices of the Nymex futures contracts for August 2017 delivery at Henry Hub were relatively unchanged at $3.11/MMBtu in 492 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices varied in subsequent trading, ranging between $3.10/MMBtu and $3.11/MMBtu.

Temperatures were warmer than normal in most parts of the Lower 48 states during the storage week. Temperatures in the Lower 48 states averaged 77 degrees Fahrenheit (°F), 2°F higher than the average and the same as last year at this time. Temperatures were warmer than average in parts of the South Central region, where natural gas-fired electricity generation for air conditioning plays a crucial role in summertime demand for natural gas. Temperatures in the Lower 48 states averaged 77 degrees Fahrenheit (°F), 2°F higher than the average and the same as last year at this time. Temperatures in the East South Central Census division averaged 79°F, 1°F higher than the average and 1°F lower than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook