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Natural Gas Weekly Update

for week ending January 17, 2018   |  Release date:  January 18, 2018   |  Next release:  January 25, 2018   |   Previous weeks


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

In the News:

EIA estimates that December 2017 U.S. natural gas production set a new record

EIA’s Short-Term Energy Outlook (STEO), released January 9, 2018, estimates that U.S. dry natural gas production averaged a record-high 78.1 billion cubic feet per day (Bcf/d) during December 2017, topping the previous estimated record set the month before when dry U.S. production averaged 77.3 Bcf/d. STEO forecasts that dry U.S. natural gas production will average 73.6 Bcf/d in 2017, or 0.7 Bcf/d (1%) higher than 2016 average production of 72.9 Bcf/d. STEO’s forecast 2017 production is still lower than the record annual average U.S. natural gas production of 74.2 Bcf/d in 2015.

Before November 2017, the record monthly dry natural gas production occurred in April 2015, averaging 75.2 Bcf/d. Average monthly production fell by more than 4.0 Bcf/d from April 2015 to December 2016. However, STEO estimates 11 out of 12 months in 2017 had month-on-month increases in natural gas production, culminating in the record levels seen in November and December.

Several factors supported higher levels of dry natural gas production in 2017. Total natural gas demand was higher in the last three months of 2017 than during the same period in 2016, in part because of higher levels of pipeline and liquefied natural gas (LNG) exports. Pipeline exports to Mexico increased by 0.4 Bcf/d (9%) in the last three months of 2017 compared to the same period in 2016, while LNG exports increased by 1.9 Bcf/d (176%).

In addition, continued buildout of takeaway capacity, especially in the significant production areas of the Northeast, allowed for production increases in some established producing areas. Natural gas pipeline projects (including reversals, expansions, and new pipelines) with capacity totaling more than 9.3 Bcf/d were completed in 2017, of which more than 4.0 Bcf/d begins in Pennsylvania.

The STEO is forecasting an annual 9% increase in U.S. dry production from 2017 to 2018 and another 3% increase from 2018 to 2019 as pipeline capacity and exports continue to increase.

Overview:

(For the Week Ending Wednesday, January 10, 2017)

  • Natural gas spot prices fell at most locations this report week (Wednesday, January 3 to Wednesday, January 10). The Henry Hub spot price fell from $6.88/MMBtu last Wednesday to $3.11/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the February 2018 contract price fell 10¢ from $3.008/MMBtu last Wednesday to $2.906/MMBtu yesterday.
  • Record breaking net withdrawals from working gas totaled 359 billion cubic feet (Bcf) for the week ending January 5. Working natural gas stocks are 2,767 Bcf, which is 12% lower than the year-ago level and 13% lower than the five-year (2013–17) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 22¢, averaging $8.26/MMBtu for the week ending January 10. The price of natural gasoline, propane, butane, and isobutane fell by 2%, 3%, 8%, and 6%, respectively. The price of ethane rose by 7%.
  • According to Baker Hughes, for the week ending Tuesday, January 2, the natural gas rig count remained flat at 182. The number of oil-directed rigs fell by 5 to 742. The total rig count decreased by 5, and it now stands at 924.

more summary data

Prices/Supply/Demand:

Prices fall across the country as temperatures increase. This report week (Wednesday, January 3 to Wednesday, January 10), spot prices fell across the country as much colder-than-normal temperatures east of the Rockies moderated. The Henry Hub spot price fell $3.77 from $6.88/MMBtu last Wednesday to $3.11/MMBtu yesterday, with a low of $2.87/MMBtu on Monday. At the Chicago Citygate, prices decreased $3.46 from $6.49/MMBtu last Wednesday to $3.03/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 21¢, down from $3.08/MMBtu last Wednesday to $2.87/MMBtu yesterday. The price at SoCal Citygate decreased $3.01 from $6.15/MMBtu last Wednesday to $3.14/MMBtu yesterday.

Northeast price points spike during winter storm. At the Algonquin Citygate, which serves Boston-area consumers, prices fell $33.74 from $38.22/MMBtu last Wednesday to $4.48/MMBtu yesterday. Prices at Algonquin reached a high on Thursday of $78.98/MMBtu, as the Northeast coasts were hit by severe winter weather. In addition, the Pilgrim Nuclear Power Station in Plymouth, Massachusetts, was taken offline on Thursday during the storm after some transmission lines were damaged, increasing demand for natural gas-fired electric generation. The Pilgrim plant has an electricity capacity of 683 megawatts and was reconnected to the grid Wednesday evening.

Spot prices at Transcontinental Pipeline Zone 6 trading point for New York reached an all-time high on Thursday, averaging $140.06/MMBtu. The previous record was $128.31/MMBtu ($121.68/MMBtu in 2014 dollars) in January 2014, during a polar vortex event. Over the week, prices at Transco Zone 6 decreased $45.16 from $48.38/MMBtu last Wednesday to $3.22/MMBtu yesterday. Tennessee Zone 4 Marcellus spot prices decreased $3.21 from $5.75/MMBtu last Wednesday to $2.54/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell $3.17 from $5.86/MMBtu last Wednesday to $2.69/MMBtu yesterday.

Future prices fall. At the Nymex, the price of the February 2018 contract decreased 10¢, from $3.008/MMBtu last Wednesday to $2.906/MMBtu yesterday. The price of the 12-month strip averaging February 2018 through January 2019 futures contracts declined 5¢ to $2.830/MMBtu.

Supply remains flat. According to data from PointLogic Energy, the average total supply of natural gas remained the same as the previous report week, averaging 82.3 Bcf/d. Dry natural gas production grew by 2% compared with the previous report week, partly as a result of a reduction in well freeze-offs from last week. Average net imports from Canada decreased by 20% from last week.

Demand falls. Domestic demand fell across nearly all sectors, as temperatures moderated from the previous week’s cold. Total U.S. consumption of natural gas fell by 14% compared with the previous report week, according to data from PointLogic Energy, and on Monday fell below 100 Bcf/d for the first time since December 25. Natural gas consumed for power generation declined by 10% week over week, and industrial sector consumption decreased by 7% week over week after hitting an all-time high on January 1. In the residential and commercial sectors, consumption declined by 19%. Natural gas exports to Mexico increased 2%.

U.S. liquefied natural gas (LNG) exports decrease week over week. Three LNG vessels (LNG-carrying capacity 10.4 Bcf combined) departed the Sabine Pass liquefaction facility last week (Thursday to Wednesday) and one tanker (LNG-carrying capacity 3.4 Bcf) was loading at the terminal on Wednesday.

The start-up of Dominion Energy’s Cove Point liquefaction terminal in Lusby, Maryland, is now anticipated for early spring, according to a report by Bloomberg.

more price data

Storage:

Weekly withdrawals break the 300 Bcf level for the first time. Net withdrawals from storage totaled 359 Bcf for the week ending January 5, compared with the five-year (2013–17) average net withdrawals of 169 Bcf and last year's net withdrawals of 136 Bcf during the same week. Working gas stocks totaled 2,767 Bcf, which is 382 Bcf less than the five-year average and 415 Bcf less than last year at this time. Working gas levels are lower than the five-year averages in all regions for this time of year.

Record level withdrawals reported in all regions except for the Pacific. The East and Midwest regions exceeded the previous record high by 10 Bcf (15%) and 14 Bcf (17%), respectively. Withdrawals in the South Central salt and nonsalt regions totaled 78 Bcf and 76 Bcf, respectively and surpassed the previous record levels by 30 Bcf and 10 Bcf, respectively.

The February 2018 futures contract trades at a discount to the current spot price. During the most recent storage week, the average natural gas spot price at the Henry Hub was $5.38/MMBtu, $2.41 higher than the front-month futures price on the Nymex. A year ago, the spot price was the same as the front-month contract. This pricing pattern provided economic incentives to withdraw natural gas from storage to avoid exposure to the spot market.

Reported net implied flows out of storage are near the higher end of analysts’ expectations, and prices on the Nymex rise following the release of the Weekly Natural Gas Storage Report. According to the Desk survey of natural gas analysts, estimates of the weekly net change in working natural gas storage ranged from 305 Bcf to 365 Bcf, with a median of 335 Bcf. Prices for the futures contract for February delivery rose about 3¢/MMBtu, averaging $3.04/MMBtu, at the release of the Weekly Natural Gas Storage Report, with 1,117 contracts traded. Prices remained close to this level in subsequent trading.

Temperatures are significantly lower than normal in most of the Lower 48 states during the storage week. Temperatures in the Lower 48 states averaged 23 degrees Fahrenheit (°F), 10°F lower than the normal and 16°F lower than last year at this time. Temperatures in the heavy natural gas-consuming areas of the Midwest and Northeast were significantly colder than normal—averaging less than 13°F during the week— contributing to an increased demand for natural gas.

more storage data

See also:

Monthly average dry natural gas production


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
11-Jan
Fri,
12-Jan
Mon,
15-Jan
Tue,
16-Jan
Wed,
17-Jan
Henry Hub 3.24 4.00 Holiday 5.09 3.87
New York 3.21 17.90 Holiday 13.48 9.26
Chicago 3.24 3.99 Holiday 3.91 3.32
Cal. Comp. Avg.* 2.83 2.94 Holiday 3.21 2.96
Futures ($/MMBtu)
February Contract 3.084 3.200 Holiday 3.129 3.232
March Contract 2.925 2.993 Holiday 2.962 3.024
*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: (1/11/18 - 1/17/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
85.0
84.6
78.4
Dry production
75.7
75.4
70.0
Net Canada imports
6.5
6.2
5.8
LNG pipeline deliveries
0.5
0.8
0.2
Total supply
82.7
82.3
76.0

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: (1/11/18 - 1/17/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
102.3
102.6
81.0
    Power
28.3
26.7
21.4
    Industrial
24.3
24.0
22.3
    Residential/commercial
49.7
51.8
37.2
Mexico exports
4.2
4.1
3.8
Pipeline fuel use/losses
8.0
8.0
6.3
LNG pipeline receipts
2.9
2.3
1.8
Total demand
117.4
117.0
93.0

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, January 12, 2018
Change from
 
last week
last year
Oil rigs
752
1.3%
44.1%
Natural gas rigs
187
2.7%
37.5%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, January 12, 2018
Change from
 
last week
last year
Vertical
62
0.0%
-1.6%
Horizontal
805
0.9%
49.9%
Directional
72
12.5%
22.0%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-01-12
2018-01-05
change
East
614
664
-50
Midwest
717
778
-61
Mountain
158
167
-9
Pacific
244
251
-7
South Central
851
907
-56
Total
2,584
2,767
-183
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(1/12/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
647
-5.1
683
-10.1
Midwest
805
-10.9
786
-8.8
Mountain
185
-14.6
169
-6.5
Pacific
250
-2.4
276
-11.6
South Central
1,064
-20.0
1,032
-17.5
Total
2,952
-12.5
2,946
-12.3
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending Jan 11)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
317
45
24
0
0
0
Middle Atlantic
308
48
21
0
0
0
E N Central
286
-9
-36
0
0
0
W N Central
283
-34
-65
0
0
0
South Atlantic
219
37
-4
5
-3
1
E S Central
188
-1
-35
0
-2
0
W S Central
105
-36
-50
0
-3
-4
Mountain
170
-66
-69
0
0
0
Pacific
84
-39
-39
0
0
0
United States
217
-8
-29
1
-1
0
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Jan 11, 2018

Mean Temperature (F) 7-Day Mean ending Jan 11, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Jan 11, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Jan 11, 2018

Source: NOAA National Weather Service