Natural Gas

Overview:

(For the Week Ending Wednesday, June 20, 2018)

• Natural gas spot prices rose at most locations this report week (Wednesday, June 13 to Wednesday, June 20). The Henry Hub spot price rose from $2.94/MMBtu last Wednesday to $2.95/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the July 2018 contract price remained flat Wednesday to Wednesday at $2.964/MMBtu.
• Net injections to working gas totaled 91 Bcf for the week ending June 15. Working natural gas stocks are 2,004 Bcf, which is 27% lower than the year-ago level and 20% lower than the five-year (2013–17) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 15¢, averaging $8.36/MMBtu for the week ending June 20. The price of natural gasoline, propane, butane, and isobutane fell by 4%, 2%, 4%, and 2%, respectively. The price of ethane rose by 2%.
• According to Baker Hughes, for the week ending Tuesday, June 12, the natural gas rig count decreased by 4 to 194. The number of oil-directed rigs rose by 1 to 863. The total rig count decreased by 3, and it now stands at 1,059.

more summary data

Prices/Supply/Demand:

National benchmark spot price increases week over week with warmer weather. This report week (Wednesday, June 13 to Wednesday, June 20), the Henry Hub spot price for next-day delivery rose 1¢ from $2.94/MMBtu last Wednesday to $2.95/MMBtu yesterday, while the average price for the report week increased 6¢ from last report week, from $2.90/MMBtu to $2.96/MMBtu. Over the entire report week, most areas east of the Mississippi River were warmer than last report week, with parts of the East Coast averaging up to 10°F (degrees Fahrenheit) higher than last week, according to data from the National Oceanic and Atmospheric Administration (NOAA).

Spot price at a key Midwest trading hub increases on a weekly average basis. At the Chicago Citygate, prices for next-day delivery increased 4¢ from $2.73/MMBtu last Wednesday to $2.77/MMBtu yesterday. The average price for the report week increased 12¢ from the average price last report week with steadily increased temperatures. Week-over-week average prices rose from $2.68/MMBtu last report week to $2.80/MMBtu this report week.

Southern California prices continue to be volatile with ongoing infrastructure constraints. Although spot prices in Southern California rose week over week, they continued to experience large daily changes because of ongoing storage and pipeline limitations; the price for next-day delivery at SoCal Citygate increased 43¢ from $3.36/MMBtu last Wednesday to $3.79/MMBtu yesterday. Prices throughout the report week generally moved with temperatures and reached a minimum for the week at $2.30/MMBtu over the weekend when daily average temperatures were lowest.

Northeast prices rise with warming temperatures. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 22¢ from $2.50/MMBtu last Wednesday to $2.72/MMBtu yesterday. Prices generally rose with temperatures in the first half of the week, reaching a high of $2.97/MMBtu on June 15, 2018, and decreased with temperatures in the last half of the week. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices increased 1¢ from $2.79/MMBtu last Wednesday to $2.80/MMBtu yesterday. Prices throughout the week at Transco Zone 6 NY moved much like at the Algonquin Citygate, where temperatures were similar.

Appalachian prices rise. Tennessee Zone 4 Marcellus spot prices increased 16¢ from $2.03/MMBtu last Wednesday to $2.19/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania rose from $2.29/MMBtu last Wednesday to $2.31/MMBtu yesterday. Production in the Appalachian region remained relatively unchanged despite the recent June 7 explosion on the Leach XPress pipeline, a new pipeline increasing takeaway capacity in the Appalachian production region. According to Columbia Gas Transmission’s electronic bulletin board, repairs are expected to be complete by early July.

Nymex futures rise. At the Nymex, the price of the July 2018 contract was unchanged Wednesday to Wednesday at $2.964/MMBtu. The price of the 12-month strip averaging July 2018 through June 2019 futures contracts climbed 1¢ to $2.941/MMBtu.

Average week-over-week supply increases. According to data from PointLogic Energy, the average total supply of natural gas rose by 1% compared with the previous report week. Dry natural gas production grew by 1% compared with the previous report week. Average net imports from Canada increased by 7% from last week.

Week-over-week demand rises overall because of electric power generation. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from PointLogic Energy. With warmer weather this week compared to last week across much of the Lower 48 states, natural gas consumed for power generation climbed by 12% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 11%. Natural gas exports to Mexico were the same as last week, averaging 4.4 Bcf/d.

U.S. LNG exports increase week over week. Five LNG vessels (combined LNG-carrying capacity 18.7 Bcf) departed the United States from June 14 through June 20 (three from the Sabine Pass liquefaction terminal and two from Cove Point terminal). One tanker (LNG-carrying capacity 3.6 Bcf) was loading at the Sabine Pass terminal on Wednesday.

Train 3 at the Sabine Pass liquefaction terminal, which has been shut down since May 16, reportedly returned to full production around June 14, according to Genscape. Natural gas feedstock to the facility has increased to 3.0 billion cubic feet per day (Bcf/d) on Monday, after averaging 2.2 Bcf/d since May 15, according to data by OPIS PointLogic Energy.

Storage:

Net injections rise higher than the five-year average. Net injections into storage totaled 91 Bcf for the week ending June 15, compared with the five-year (2013–17) average net injection of 83 Bcf and last year's net injections of 63 Bcf during the same week. Net injections averaged 13.7 Bcf/d and will have to average 12.6 Bcf/d for the remainder of the refill season to match the five-year average level (3,815 Bcf) by October 31. Working gas stocks totaled 2,004 Bcf, which is 499 Bcf lower than the five-year average and 757 Bcf lower than last year at this time.

Despite relatively low storage inventories, the average January 2019 futures contract price trades at a lower premium to the average spot price than last year at this time. During the most recent storage week, the average natural gas spot price at the Henry Hub averaged $2.93/MMBtu while the Nymex futures price of natural gas for delivery in January 2019 averaged $3.16/MMBtu, 24¢/MMBtu higher than the spot price. A year ago, the January contract was 35¢/MMBtu higher than the spot price.

Reported net injections into storage are on the high end of the range of analysts’ expections. According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas storage ranged from net injections of 81 Bcf to 91 Bcf, with a median estimate of 86 Bcf. At the 10:30 a.m. release of the Weekly Natural Gas Storage Report (WNGSR), the price of the Nymex futures contract for July delivery at the Henry Hub fell 2¢/MMBtu to $2.98/MMBtu, with 1,050 trades executed. Prices varied close to this price level in subsequent trading.

Temperatures are in the normal range for the storage week. Temperatures in the Lower 48 states averaged 72 degrees Fahrenheit (°F), 2°F higher than normal and the same as last year at this time. Temperatures were 2°F higher than the level reported for the previous week.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook