Natural Gas

Overview:

(For the Week Ending Wednesday, August 16, 2017)

• Natural gas spot prices rose at most locations this report week (Wednesday, August 9 to Wednesday, August 16). The Henry Hub spot price rose from $2.85 per million British thermal units (MMBtu) last Wednesday to $2.89/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the September 2017 contract price rose 1¢ from $2.883/MMBtu last Wednesday to $2.890/MMBtu yesterday.
• Net injections to working gas totaled 53 billion cubic feet (Bcf) for the week ending August 11. Working natural gas stocks are 3,082 Bcf, which is 8% less than the year-ago level and 2% 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 $6.95/MMBtu for the week ending August 16. The price of natural gasoline fell by 3%. The price of ethane, propane, butane, and isobutane rose by 4%, 3%, 3%, and 5%, respectively.
• According to Baker Hughes, for the week ending Friday, August 11, the natural gas rig count decreased by 8 to 181. The number of oil-directed rigs rose by 3 to 768. The total rig count decreased by 5, and it now stands at 949.

more summary data

Prices/Supply/Demand:

Price movements mixed with temperatures. Average temperatures in most states were higher this report week than last week, but are still below historical weekly averages, according to daily data from NOAA. This report week (Wednesday, August 9 to Wednesday, August 16), the Henry Hub spot price rose from $2.85 per million British thermal units (MMBtu) last Wednesday to $2.89/MMBtu yesterday, as average temperatures across the continental United States began the week lower than normal and ended the week above normal.

In California, temperatures decreased below average in the second half of the report week. Prices at PG&E Citygate decreased slightly, beginning the week at $3.26/MMBtu and closing the week at $3.22/MMBtu. At SoCal Citygate, prices decreased more sharply, starting the week at $3.23/MMBtu and ending the week 47¢ lower than at the start of the week.

Northeast prices rise. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 39¢ from $2.08/MMBtu last Wednesday to $2.47/MMBtu yesterday. Average temperatures in Massachusetts were varied throughout the week, ending the week higher and above average yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 55¢ from $1.77/MMBtu last Wednesday to $2.32/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices increased 15¢ from $1.62/MMBtu last Wednesday to $1.77/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 20¢ from $1.59/MMBtu last Wednesday to $1.79/MMBtu yesterday. Prices at both hubs closed the report week more than $1/MMBtu lower than the Henry Hub price. Over the past several years, several Appalachian pipeline projects have increased takeaway capacity, and the discount to the Henry Hub spot price has generally decreased.

September contract price increases slightly. At the Nymex, the price of the September 2017 contract increased 1¢, from $2.883/MMBtu last Wednesday to $2.890/MMBtu yesterday. The price of the 12-month strip averaging September 2017 through August 2018 futures contracts remained the same Wednesday to Wednesday at $3.001/MMBtu.

Supply is mixed. According to data from PointLogic Energy, the average total supply of natural gas decreased by 1% compared with the previous week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 7% from last week.

Overall demand remains flat. Total U.S. consumption of natural gas was unchanged from last week, averaging 59.9 Bcf/d, according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 1% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 4%. Natural gas exports to Mexico decreased 3%.

U.S. LNG exports decline week over week. Three vessels (combined LNG-carrying capacity of 11.4 Bcf) departed Sabine Pass last week (Thursday to Wednesday).

more price data

Storage:

Weekly net injections top five-year average. Net injections into storage totaled 53 Bcf for the week ending August 11, compared with the five-year (2012–16) average net injection of 50 Bcf and last year's net injections of 23 Bcf during the same week. The larger-than-average net injections this week likely resulted from cooler-than-normal temperatures in most of the Lower 48 states and decreased cooling demand for natural gas. Working gas stocks totaled 3,082 Bcf, which is 55 Bcf more than the five-year average and 254 Bcf less than last year at this time.

EIA revises working gas levels for the report weeks from June 30, 2017, through August 4, 2017. Working gas stocks were revised to reflect resubmissions of data during the six-week period from June 30, 2017, to August 4, 2017, in part because of restatements of natural gas in storage from working gas to base gas. Reported revisions caused working gas stocks for August 4, 2017, to change from 3,038 Bcf to 3,029 Bcf. The implied net change between the weeks ending July 28, 2017, and August 4, 2017, increased by 2 Bcf, from 28 Bcf to 30 Bcf. This revision is unusual because it represents a significant adjustment to working gas levels going back several periods. The data that was resubmitted to EIA represented a misstatement of levels, not a misstatement of natural gas flowing into or out of storage, so accordingly, the changes did not have a significant effect on the week-on-week flows. Working gas stocks for the week ending June 30, 2017—the first updated report period—were revised from 2,888 Bcf to 2,878 Bcf. As a result, the implied net change for that report week is 62 Bcf, and the implied net flow to working gas for the week remained unchanged at 72 Bcf.

Net withdrawals from storage are reported in the South Central region for the fifth week in a row. This week also marks the ninth week in row that net withdrawals were reported for salt facilities in the South Central region. Working gas levels at nonsalt facilities in the the South Central region were unchanged. Withdrawals from salt facilities totaled 7 Bcf on the week.

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 have been at 1,031 Bcf since March 31, 2017—the traditional beginning of the refill season—compared with the five-year average of 1,241 Bcf over the same period. Smaller-than-average net injections to date during the 2017 injection season are the result of high electric sector demand (that was coupled with warmer-than-normal 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 are the only regions where net injections have exceeded the five-year average. Cumulative net injections during the 2016 refill season in the Lower 48 states totaled 858 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 continues 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 $2.80/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.21/MMBtu, a difference of 41¢. The premium was 48¢ a year ago. In addition, the average natural gas spot price at the Henry Hub is 8¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 13¢ higher than the front-month contract.

Reported net implied flows into storage fell within the range of analysts’ expectations. According to The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 35 Bcf to 55 Bcf with a median of 48 Bcf. Prices on the futures contract for September delivery fell 1¢/MMBtu to $2.86/MMBtu with 1,047 contracts traded at the release of the Weekly Natural Gas Storage Report. Prices climbed in subsequent trading, gaining 5¢/MMBtu, in heavy trading.

Temperatures were close to normal, on average, in the Lower 48 states during the storage week, but considerably cooler than normal east of the Rockies. Temperatures in the Lower 48 states averaged 73 degrees Fahrenheit (°F), 2°F lower than the normal and 4°F lower than last year at this time. However, on a regional basis, temperatures were somewhat more varied. Most regions east of the Rockies reported lower-than-normal temperatures. Northern regions on the Lower 48 states, including the New England, Middle Atlantic, and East and West North Central Census divisions reported temperatures ranging between 66°F and 69°F, or 2°F to 7°F, on average. Tempertures in southern parts of the country ranged between 75°F and 81°F, or up 3°F, on average. West of the Rockies, temperatures were warmer than normal. Temperatures in the Pacific Census division averaged 75°F, 4°F higher than the normal and 3°F higher than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook