Natural Gas

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Natural Gas Weekly Update

for week ending September 13, 2017   |  Release date:  September 14, 2017   |  Next release:  September 21, 2017   |   Previous weeks


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

In the News:

Natural gas spot prices at Henry Hub decrease slightly during the days after Hurricane Harvey

In the days following Hurricane Harvey’s landfall on the Texas Gulf Coast as a Category 4 storm on Friday, August 25, 2017, prices at the Henry Hub in Louisiana—generally considered the U.S. price—actually decreased. Prices at the U.S. benchmark Henry Hub in Louisiana had averaged $2.93 per million British thermal units ($/MMBtu) in the week prior to landfall, the same as the average price on the day of landfall. Prices at the Houston Ship Channel—a key regional trading hub for natural gas—originally decreased with the Henry Hub price before increasing to 2% above the August 25 trading price 5 days after landfall, only to drop by about 3% after 10 days.

Regional supply decreases. As recently as 2001, natural gas production from the Federal Gulf of Mexico (GOM) contributed more than 25% of the U.S. total. Over time, that share has been steadily decreasing and in 2016, GOM production represented just 4% of total U.S. natural gas production. As more volumes of natural gas are produced from on-shore shale resources typically outside hurricane-prone zones, natural gas production that is disrupted because of hurricanes is lower, and the impact on the U.S. natural gas market is less severe. From August 24–September 4, 2017, the Bureau of Safety and Environmental Enforcement within the Department of the Interior reported that GOM shut-ins, or reduced production of offshore natural gas, averaged 544 million cubic feet per day (MMcf/d), reaching a maximum of 835 MMcf/d on August 26.

Hurricane Harvey mostly affected onshore natural gas production in the Eagle Ford shale play in South Texas. Natural gas production from the Eagle Ford averaged 6 Bcf/d in the first eight months of 2017. Average Texas Gulf Coast onshore production between August 25 and September 2, 2017, including production from the Eagle Ford, was 80% lower than in the week prior to Hurricane Harvey making landfall based on limited sample data from S&P Global Platts's Southeast Gulf/Texas Observer. Production returned to typical levels by September 6.

Regional demand for natural gas decreases with power outages and lower temperatures. By the time Hurricane Harvey made landfall, lower-than-average temperatures had already pushed electric loads below typical levels in the region. In the days following the storm, a combination of outages and decreasing temperatures caused hourly loads to decrease below the previous five-year lows in Texas’s most affected Coast, South Central, South, and North Central Weather Zones. In the ERCOT Coast Weather Zone—where Houston is located and where the hurricane affected the most people—loads decreased by as much as half on days following the hurricane. As Hurricane Harvey made landfall, natural gas consumption for electric power generation in Texas decreased below 2011–15 lows. Natural gas consumption for power generation has continued to decrease even with power restorations as temperatures have remained lower than seasonal averages.

Natural gas demand in the industrial sector in Texas was affected as well. As of August 25, several natural gas processing plants and other industrial consumers were shut down by their operators, though they resumed operations last week.

U.S. exports of natural gas were disrupted by Hurricane Harvey. On August 28, 2017, the U.S. Coast Guard closed several regional ports because of the storm. For days after, no liquefied natural gas (LNG) tankers departed from the Sabine Pass in Louisiana. On September 6, one vessel with a carrying capacity of 3.8 Bcf was being loaded, while six other vessels were near the port waiting for a loading window.

Pipeline flows from Texas to Mexico decreased more than 60% compared to the prior week on the day Hurricane Harvey made landfall according to S&P Global Platts. At least part of this decrease was because two compressor stations shut down on the Tennessee Gas line in South Texas as employees were evacuated according to Bloomberg. As of September 11, pipeline flows had returned to pre-hurricane levels.

Overview:

(For the Week Ending Wednesday, September 13, 2017)

  • Natural gas spot prices rose at most locations this report week (Wednesday, September 6 to Wednesday, September 13). The Henry Hub spot price rose from $2.93 per million British thermal units (MMBtu) last Wednesday to $2.99/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the October 2017 contract price rose 6¢ from $3.000/MMBtu last Wednesday to $3.058/MMBtu yesterday.
  • Net injections to working gas totaled 91 billion cubic feet (Bcf) for the week ending September 8. Working natural gas stocks total 3,311 Bcf, which is 5% less than the year-ago level and 1% more than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 23¢, averaging $7.33/MMBtu for the week ending September 13. The prices of natural gasoline, ethane, propane, and butane rose by 3%, 6%, 4%, and 2%, respectively. The price of isobutane remained flat week over week.
  • According to Baker Hughes, for the week ending Friday, September 8, the natural gas rig count increased by 4 to 187. The number of oil-directed rigs fell by 3 to 756. The total rig count increased by 1, and it now stands at 944.

more summary data

Prices/Supply/Demand:

Prices mostly increase. This report week (Wednesday, September 6 to Wednesday, September 13), the Henry Hub spot price rose 6¢ from $2.93/MMBtu last Wednesday to $2.99/MMBtu yesterday. As a cool weather front moved across the country into the Northeast, prices dipped at most trading locations on Friday, but they generally rebounded by the end of the week.

At the Chicago Citygate, prices increased 9¢ from $2.86/MMBtu last Wednesday to $2.95/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 4¢, up from $3.36/MMBtu last Wednesday to $3.40/MMBtu yesterday. The price at SoCal Citygate decreased 10¢ from $3.25/MMBtu last Wednesday to $3.15/MMBtu yesterday.

Hurricane Irma knocks out electric power. Hurricane Irma made landfall in Florida on September 10, causing about 60% of the state to lose power, and it is still pressing northwestward across the Tennessee and Ohio Valleys. Power outages yesterday totaled more than 4 million households, most of which are concentrated in Florida, but power outages are also affecting customers in Georgia, South Carolina, North Carolina, Puerto Rico, and the U.S. Virgin Islands. This number of outages is down from what may have been peak outage on Monday, when nearly 6.5 million electricity customers in Florida and Puerto Rico were without power. With 66% of Florida’s electricity generation coming from natural gas, electric generators in the state generally consume about 3 Bcf/d. The demand destruction from Irma does not seem to have had a large price effect.

Northeast prices mixed. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 44¢ from $1.69/MMBtu last Wednesday to $2.13/MMBtu yesterday. On Friday, the Algonquin price dipped to $1.10 on cool weather in the region, but it rebounded by yesterday.

At the Transcontinental Pipeline Zone 6 trading point for New York, prices increased 1¢ to $2.43/MMBtu yesterday.

Prices at Dominion South in northwest Pennsylvania fell 25¢ from $1.41/MMBtu last Wednesday to $1.16/MMBtu yesterday. Tennessee Zone 4 Marcellus spot prices decreased 34¢ from $1.34/MMBtu last Wednesday to $1.00/MMBtu yesterday. Similar to the trend at other price points, the Tennessee Zone 4 Marcellus price reached an intra-week low on Friday of $0.63/MMBtu.

Supply flat. According to data from PointLogic Energy, the average total supply of natural gas remained the same as the previous report week, averaging 79.2 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 6% from last week.

Overall demand down. Total U.S. consumption of natural gas fell by 7% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined by 14% week over week, driven by cool weather and demand destruction from Hurricane Irma. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption increased by 10%, as temperatures averaged in the 50° F range in parts of the Northeast and Midwest. Natural gas exports to Mexico decreased 3%.

U.S. LNG exports increase. Since LNG vessel loadings resumed at the Sabine Pass liquefaction terminal following Hurricane Harvey on Wednesday, September 6, five vessels (LNG-carrying capacity 18.1 Bcf) have departed the terminal. One vessel (LNG-carrying capacity 3.7 Bcf) was loading at the terminal on September 13. The port of Sabine Pass was inaccessible to LNG vessels for almost two weeks, as port operations were suspended in the wake of Hurricane Harvey.

more price data

Storage:

Working gas stocks post largest weekly increase since June 2017. Net injections into storage totaled 91 Bcf, compared with the five-year (2012–16) average net injection of 63 Bcf and last year's net injections of 58 Bcf during the same week. This is the largest net injection since June 2 when net injections into working gas totaled 106 Bcf. Mild temperatures and increased production likely contributed to increased injections activity. Net injections into storage exceeded the five-year average by 10 Bcf in the East region and by 3 Bcf in the Midwest region. By far the largest gain versus the five-year average occurred in the South Central salt region, where net injections totaled 19 Bcf, topping the five-year average by 18 Bcf. Working gas stocks total 3,311 Bcf, which is 43 Bcf more than the five-year average and 179 Bcf less than last year at this time.

The South Central region reports largest net injection of the 2017 refill season. Working gas stocks rose by 26 Bcf on the week—tying the largest net injection of the 2017 refill season reported on April 14. The salt facilities in the region led the way, posting net gains of 19 Bcf—the highest weekly net injections of the 2017 refill season. Working gas stocks at salt dome facilities in the region now exceed last year’s level at this time by 1 Bcf. However, working gas levels remain 76 Bcf below the level reported last year at this time.

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 $2.89/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.32/MMBtu, a difference of 43¢. The premium was 43¢ a year ago. The spot price at the Henry Hub was also 12¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 11¢ higher than the front-month contract.

Reported net implied flows into storage are on the high side of analysts’ expectations. According to the Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 72 Bcf to 95 Bcf with a median of 85 Bcf. Prices on the futures contract for October delivery remained close to $3.05/MMBtu with 227 contracts traded at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices increased thereafter to $3.09/MMBtu in heavy trading, with some spikes in trading activity exceeding 1,000 contracts traded per second.

For the second week in a row, temperatures are cooler than normal in most of the Lower 48 states east of the Rockies. Temperatures in the Lower 48 states averaged 69°F, 2°F lower than the normal and 4°F lower than last year at this time. Temperatures in northern areas of the Lower 48 states, including New England, Middle Atlantic, and the East and West North Central Census divisions, ranged between 61°F and 64°F, or 2°F to 6°F below the normal. Temperatures in the southern areas, including the South Atlantic and the East and West South Central Census divisions ranged between 69°F and 77°F, or or 2°F to 4°F below the normal. Temperatures west of the Rocky Mountains averaged 75°F to 77°F, about 6°F to 8°F higher than the normal.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
07-Sep
Fri,
08-Sep
Mon,
11-Sep
Tue,
12-Sep
Wed,
13-Sep
Henry Hub
2.88
2.83
2.85
2.89
2.99
New York
1.76
1.28
2.34
2.29
2.43
Chicago
2.83
2.74
2.83
2.89
2.95
Cal. Comp. Avg.*
2.99
2.88
2.93
3.01
3.04
Futures ($/MMBtu)
October Contract
2.981
2.890
2.950
3.001
3.058
November Contract
3.053
2.965
3.019
3.067
3.118
*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: (9/7/17 - 9/13/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
83.2
82.7
80.7
Dry production
73.9
73.7
72.0
Net Canada imports
5.2
5.5
5.9
LNG pipeline deliveries
0.1
0.1
0.1
Total supply
79.2
79.2
78.0

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: (9/7/17 - 9/13/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
52.0
55.7
59.7
    Power
25.2
29.4
33.9
    Industrial
19.8
20.0
19.4
    Residential/commercial
7.0
6.3
6.4
Mexico exports
4.0
4.1
4.2
Pipeline fuel use/losses
5.8
6.2
6.6
LNG pipeline receipts
2.1
0.5
1.3
Total demand
63.8
66.5
71.8

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, September 08, 2017
Change from
 
last week
last year
Oil rigs
756
-0.4%
82.6%
Natural gas rigs
187
2.2%
103.3%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, September 08, 2017
Change from
 
last week
last year
Vertical
75
10.3%
17.2%
Horizontal
793
-0.1%
100.3%
Directional
76
-6.2%
58.3%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-09-08
2017-09-01
change
East
809
781
28
Midwest
906
872
34
Mountain
208
205
3
Pacific
296
296
0
South Central
1,092
1,066
26
Total
3,311
3,220
91
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(9/8/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
829
-2.4
793
2.0
Midwest
950
-4.6
896
1.1
Mountain
227
-8.4
195
6.7
Pacific
316
-6.3
335
-11.6
South Central
1,168
-6.5
1,049
4.1
Total
3,490
-5.1
3,268
1.3
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Sep 07)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
28
15
26
11
-2
-22
Middle Atlantic
26
19
25
7
-18
-35
E N Central
37
24
33
6
-19
-36
W N Central
26
8
21
22
-12
-22
South Atlantic
6
5
6
64
-10
-25
E S Central
11
10
11
42
-24
-51
W S Central
1
0
1
84
-17
-29
Mountain
5
-17
0
77
26
11
Pacific
0
-8
-5
87
51
56
United States
17
8
15
46
-2
-15
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Sep 07, 2017

Mean Temperature (F) 7-Day Mean ending Sep 07, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Sep 07, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending Sep 07, 2017

Source: NOAA National Weather Service