Natural Gas

Overview:

(For the Week Ending Wednesday, October 11, 2017)

• Natural gas spot price movements were mixed this report week (Wednesday, October 4 to Wednesday, October 11). The Henry Hub spot price rose from $2.81 per million British thermal units (MMBtu) last Wednesday to $2.93/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the November 2017 contract price fell 5¢ from $2.940/MMBtu last Wednesday to $2.889/MMBtu yesterday.
• Net injections to working gas totaled 87 billion cubic feet (Bcf) for the week ending October 6. Working natural gas stocks total 3,595 Bcf, which is 4% less than the year-ago level and slightly lower than the five-year (2012–16) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 10¢, averaging $7.92/MMBtu for the week ending October 11. The price of ethane fell by 2%. The price of natural gasoline rose by 1%, and propane, butane, and isobutane prices each rose by 2%.
• According to Baker Hughes, for the week ending Friday, October 6, the natural gas rig count decreased by 2 to 187. The number of oil-directed rigs also fell by 2 to 748. The total rig count decreased by 4, and it now stands at 936.

more summary data

Prices/Supply/Demand:

Prices mostly rise this week with increased demand. This report week (Wednesday, October 4 to Wednesday, October 11), the Henry Hub spot price rose 12¢ from $2.81/MMBtu last Wednesday to $2.93/MMBtu yesterday. At the Chicago Citygate, prices increased 8¢ to $2.79/MMBtu yesterday.

Prices at PG&E Citygate in Northern California fell 2¢ to $3.13/MMBtu yesterday, while the price in Southern California at SoCal Citygate increased 2¢ to $3.14/MMBtu yesterday.

Weather this report period was generally mixed. Temperatures fell in the western half of the country, prompting elevated levels of heating demand. The eastern half of the country, by contrast, experienced temperatures far above the seasonal norm. Pennsylvania and several surrounding states experienced temperatures averaging around 70 degrees Fahrenheit (°F), which is about 14°F above the seasonal norm for this time of year. These temperatures prompted some decreased heating demand, as well as an increase in electricity demand for home cooling along the Atlantic Coast.

Northeast prices fall substantially. Warmer weather in the Northeast reduced home heating demand both in Boston and in New York City. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 28¢ from $2.78/MMBtu last Wednesday to $2.50/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices decreased 16¢ from $2.78/MMBtu last Wednesday to $2.62/MMBtu yesterday.

Appalachian prices mixed, but remain below $1 per MMBtu. Tennessee Zone 4 Marcellus spot prices decreased 12¢ from 92¢/MMBtu last Wednesday to 80¢/MMBtu yesterday. Prices at Dominion South in Northwest Pennsylvania rose 8¢ from 84¢/MMBtu last Wednesday to 92¢/MMBtu yesterday. These low regional prices are reflection of a regional infrastructure constraint. The Rover Pipeline will alleviate some of this problem, but the pipeline is currently only partially operational. Earlier this week, FERC approved partial service of a compressor station in Carroll County, Ohio for the project.

Supply down slightly. According to data from PointLogic Energy, the average total supply of natural gas fell by 2% compared with the previous week. Both dry natural gas production and average net imports from Canada decreased by 2% compared with the previous report week.

This report week also saw substantial production shut-ins in the Gulf of Mexico because of Hurricane Nate. As of yesterday, well over half of production volumes in the Gulf were still shut in. With the storm now passed, production facilities will begin to restart.

Overall demand increases on cold weather in the West and warm weather in the East. Total U.S. consumption of natural gas rose by 7% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 12% week over week, industrial sector consumption decreased by 2%, and residential and commercial sector consumption increased by 18%. Natural gas exports to Mexico increased 3%.

U.S. LNG exports increase. Five vessels (LNG-carrying capacity 18.4 Bcf) departed the Sabine Pass liquefaction terminal last week (Thursday to Wednesday).

more price data

Storage:

Net injections are up on the week and match the five-year average. Net injections into storage totaled 87 Bcf for the week ending October 6, equivalent to the five-year (2012–16) average net injection of 87 Bcf and higher than last year's net injections of 79 Bcf during the same week. Declines in power demand for natural gas contributed to increased net injections compared with the previous report week despite declines in natural gas production. Net injections into storage were lower than the five-year average in all regions except the East region and Midwest region. The South Central region reported net injections totaling 22 Bcf, which is 8 Bcf lower than the five-year average net injection. Working gas stocks total 3,595 Bcf, which is 8 Bcf less than the five-year average and 153 Bcf less than last year at this time.

Working gas stocks are poised to end the refill season near the five-year average. So far during the 2017 refill season, net injections into storage are 15% lower than the comparable five-year average—1,544 Bcf during the 2017 refill season compared with the five-year average increase of 1,817 Bcf. If net injections continue to be 15% lower than the five-year average, then working gas stocks will reach 3,834 Bcf by the end of the refill season. However, working gas stocks will total 3,842 Bcf if net injections into working gas match the five-year average for the remainder of the 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 $2.83/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.24/MMBtu, a difference of 41¢. The premium was 45¢ a year ago. The average natural gas spot price at the Henry Hub was 11¢ lower than the front-month futures price at the Nymex. A year ago, the spot price was 10¢ lower than the front-month contract.

The reported net implied flows into storage are close to analysts’ expectations. According to the Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 77 Bcf to 92 Bcf with a median of 85 Bcf. Prices on the futures contract for November delivery fell about 2¢/MMBtu to $2.94/MMBtu with 885 contracts traded at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices recovered somewhat in subsequent trading, averaging roughly $2.95/MMBtu.

Temperatures are higher than normal east of the Rockies. Temperatures in the Lower 48 states averaged 64°F, 2°F higher than the normal and 2°F lower than last year at this time. Temperatures in the Mountain Census division averaged 58°F, which is 2°F lower than the normal and 7°F lower than last year at this time. Temperatures in the Pacific Census division averaged 63°F, which is 2°F lower than the normal and 2°F lower than last year at this time.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook