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Natural Gas Weekly Update

for week ending September 19, 2018   |  Release date:  September 20, 2018   |  Next release:  September 27, 2018   |   Previous weeks


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

In the News:

Hurricane Florence affects natural gas demand for electricity in the Carolinas

Hurricane Florence affected the natural gas market last week as lower electricity consumption resulted in decreased natural gas consumption by natural gas-fired electricity generators. Although Florence made landfall on Friday, September 14 as a Category 1 hurricane, it remained over the Carolinas as a tropical storm through Saturday night, causing numerous power outages and reducing demand for electricity. According to Genscape data, the volume of natural gas delivered from interstate transmission pipelines to electric utilities in North Carolina and South Carolina decreased by 0.8 Bcf/d on Saturday, September 15 compared to the previous week―September 7–13―when deliveries averaged 2.0 Bcf/d.

The National Hurricane Center warned that life-threatening storm surges and catastrophic flooding would accompany Hurricane Florence. The storm made landfall at 7:15 a.m. Friday near the North Carolina-South Carolina border then moved slowly along the South Carolina coast; Florence was downgraded to a tropical depression on Sunday. Because of widespread power outages, peak electric loads over the weekend were 30%–35% lower compared to the previous weekend―September 8–9.

According to EIA’s Hurricane Florence Status Report published the morning of Saturday, September 15, more than 800,000 customers in North Carolina (16%) and 95,000 customers in South Carolina (4%) were without power. However, Duke Energy has confirmed that almost 1.7 million customers experienced an outage as a result of Hurricane Florence. As of Tuesday, September 18, EIA estimated that 6% of customers in North Carolina and less than 1% of customers in South Carolina remained without power.

Duke Energy, which includes Duke Energy Carolinas and Duke Energy Progress East and West, accounted for about 75% of the estimated 0.8 Bcf/d decline in natural gas consumption. Since Monday, however, deliveries to electric utilities and power plants have increased to 2.3 Bcf/d on average, according to data from Genscape, which is slightly higher than the levels observed in the previous week. Natural gas use by electricity generators is now 10% higher than pre-storm levels, which offsets a 3 gigawatt (GW) decline in the availability of nuclear capacity. The 1.86 GW Brunswick nuclear power plant, located 4 miles from the coast near Wilmington, North Carolina, shut down its units on Thursday, September 13 in preparation for the storm and remains offline. An additional 1.16 GW of capacity is offline as the second unit at the McGuire nuclear plant undergoes planned maintenance.

Nuclear energy is the primary electricity-generating fuel in North Carolina and South Carolina, accounting for 43% of total electricity generated in the two states in 2016. Although coal (26%) accounted for a larger share than natural gas (24%) of net electric power generation in 2016, natural gas has since surpassed coal in both states. In May 2018, natural gas accounted for 30% of net generation in North Carolina and 16% of net generation in South Carolina while coal accounted for 24% and 13%, respectively.

Overview:

(For the Week Ending Wednesday, September 19, 2018)

  • Natural gas spot prices rose at most locations this report week (Wednesday, September 12 to Wednesday, September 19). Henry Hub spot prices rose from $2.93 per million British thermal units (MMBtu) last Wednesday to $3.06/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the October 2018 contract price rose 8¢ from $2.829/MMBtu last Wednesday to $2.908/MMBtu yesterday.
  • Net injections to working gas totaled 86 billion cubic feet (Bcf) for the week ending September 14. Working natural gas stocks are 2,722 Bcf, which is 20% lower than the year-ago level and 18% lower than the five-year (2013–17) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 44¢, averaging $10.85/MMBtu for the week ending September 19. The price of ethane rose by 15%; the price of propane, butane, and isobutene each rose by 1%. The price of natural gasoline remained flat week over week.
  • According to Baker Hughes, for the week ending Tuesday, September 11, the natural gas rig count remained flat at 186. The number of oil-directed rigs rose by 7 to 867. The total rig count increased by 7, and it now stands at 1,055.

more summary data

Prices/Supply/Demand:

National benchmark spot price increases to its highest level since January 2018. This report week (Wednesday, September 12 to Wednesday, September 19), Henry Hub spot prices rose 13¢ from $2.93/MMBtu last Wednesday to $3.06/MMBtu yesterday, which is the highest Henry Hub price since January 31 of this year when prices averaged $3.21/MMBtu, according to Natural Gas Intelligence. Prices at regional hubs generally rose across the country, except in the Permian basin, where prices fell. Temperatures were warmer than normal—above 75 degrees Fahrenheit—throughout much of the Lower 48 states and cooler than normal in California and the Pacific Northwest.

At the Chicago Citygate, prices increased 28¢ from $2.72/MMBtu last Wednesday to $3.00/MMBtu yesterday. Prices at PG&E Citygate in Northern California stayed level week over week at $3.09/MMBtu. Prices at SoCal Citygate increased $1.03 from $3.55/MMBtu last Wednesday to $4.58/MMBtu—their weekly high—yesterday.

Northeast prices rise. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 16¢ from $2.75/MMBtu last Wednesday to $2.91/MMBtu yesterday, reaching their weekly high of $3.00/MMBtu on Monday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices increased 10¢ from $2.91/MMBtu last Wednesday to $3.01/MMBtu yesterday.

On Thursday, September 13, at least 70 natural gas leaks and explosions occurred in northeast Massachusetts. Following the explosions, nearly 8,600 customers of Columbia Gas of Massachusetts had their natural gas shut off as Columbia Gas and other companies conducted safety checks in the area. Service has since been restored to most customers. An investigation by the National Safety Transportation Board has determined the event was likely caused by over-pressured natural gas lines.

Appalachian prices rise. Tennessee Zone 4 Marcellus spot prices increased 36¢ from $2.19/MMBtu last Wednesday to $2.55/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania rose 34¢ from $2.23/MMBtu last Wednesday to $2.57/MMBtu yesterday.

Permian basin spot prices decline, reaching a new record differential to Henry Hub spot prices. Yesterday, prices at the Waha Hub in West Texas, which is located near Permian Basin production activities, dropped to $0.61/MMBtu, $2.45 lower than Henry Hub prices. Prices had been declining steadily during most of the report week―from $2.00/MMBtu last Wednesday to $1.67/MMBtu on Tuesday―before yesterday’s record-low.

Power outages persist following Hurricane Florence. As of Thursday morning, the North Carolina Department of Public Safety reported 114,389 power outages statewide. Natural gas demand destruction may persist near Wilmington, North Carolina, as continued flooding prevents maintenance crews from restoring power.

Nymex futures prices increase. At the Nymex, the price of the October 2018 contract increased 8¢, from $2.829/MMBtu last Wednesday to $2.908/MMBtu yesterday. The price of the 12-month strip averaging October 2018 through September 2019 futures contracts climbed 1¢ to $2.779/MMBtu.

Supply rises. 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% week on week, exceeding 83 Bcf/d for a second week in a row and averaging 83.9 Bcf/d. Average net imports from Canada increased by 11% from last week.

Demand rises, driven by consumption in the electric power sector. Total U.S. consumption of natural gas rose by 5% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 14% week over week. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption declined by 12%. Natural gas exports to Mexico were the same as last week, averaging 4.7 Bcf/d.

U.S. liquefied natural gas (LNG) exports decrease week over week. Five LNG vessels (four from the Sabine Pass liquefaction terminal and one from Cove Point) with a combined LNG-carrying capacity of 17.8 Bcf departed the United States between September 13 and September 19. Three more tankers (combined LNG-carrying capacity 11.3 Bcf) were loading on Wednesday, two at Sabine Pass and one at Cove Point LNG terminals.

Cove Point LNG facility received an LNG vessel on Sunday, September 16, two days after the landfall of Hurricane Florence in North Carolina. The second LNG vessel after the hurricane arrived at Cove Point terminal on Tuesday.

Storage:

Net injection levels are higher than the five-year average. Net injections into storage totaled 86 Bcf for the week ending September 14, compared with the five-year (2013–17) average net injections of 76 Bcf and last year's net injections of 96 Bcf during the same week. Working gas stocks totaled 2,722 Bcf, which is 586 Bcf lower than the five-year average and 672 Bcf lower than last year at this time.

Working gas stocks remain lower than the five-year range, although the deficit shrinks this week. The average rate of net injections into storage is 15% lower than the five-year average so far in the 2018 refill season, which covers April through October. If the rate of injections into working gas matched the five-year average of 10.8 Bcf/d for the remainder of the refill season, total inventories would be 3,230 Bcf on October 31, which is 585 Bcf lower than the five-year average of 3,815 Bcf. In the Lower 48 states, total working gas stocks are currently 196 Bcf lower than the five-year minimum, and every storage region is currently near or lower than the bottom of the five-year range. As of this report week, the Midwest region is 83 Bcf (11%) lower than the five-year minimum, and the South Central region―including both salt and non-salt facilities―is 41 Bcf (22%) lower than the five-year minimum.

The average January 2019 futures contract price is trading at a lower premium to the average spot price than last year at this time. Price differences between the spot price and the futures price at the Nymex indicate limited economic incentives for injections into working gas. During the most recent storage week, the average natural gas spot price at the Henry Hub averaged $2.89/MMBtu, and the Nymex futures price of natural gas for delivery in January 2019 averaged $2.99/MMBtu, 10¢/MMBtu higher than the spot price. A year ago, the January contract was 41¢/MMBtu higher than the spot price.

Reported net injections into storage are higher than the median of analysts’ expectations. 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 77 Bcf to 94 Bcf, with a median estimate of 82 Bcf. At the 10:30 a.m. release of the Weekly Natural Gas Storage Report, the price of the Nymex futures contract for October delivery at the Henry Hub fell by 1¢/MMBtu to $2.89/MMBtu, with 301 trades executed. The price settled up slightly at about $2.91/MMBtu in subsequent trading.

Temperatures were close to normal for the storage week. Temperatures in the Lower 48 states averaged 70 degrees Fahrenheit (°F), 1°F higher than normal and 4°F higher than last year at this time. Temperatures were 6°F higher than those reported for the previous week.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
13-Sep
Fri,
14-Sep
Mon,
17-Sep
Tue,
18-Sep
Wed,
19-Sep
Henry Hub
2.93
2.85
2.90
2.97
3.06
New York
2.83
2.64
3.08
3.27
3.01
Chicago
2.76
2.70
2.89
2.97
3.00
Cal. Comp. Avg.*
2.55
2.45
2.64
2.77
2.47
Futures ($/MMBtu)
October contract
2.817
2.767
2.814
2.933
2.908
November contract
2.800
2.751
2.779
2.896
2.882
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Sources: Natural Gas Intelligence and CME Group as compiled by Bloomberg, L.P.
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (9/13/18 - 9/19/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
95.5
94.7
83.3
Dry production
83.9
83.2
73.7
Net Canada imports
5.0
4.5
5.6
LNG pipeline deliveries
0.1
0.1
0.0
Total supply
88.9
87.8
79.3

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: (9/13/18 - 9/19/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
63.0
60.1
56.0
    Power
35.6
31.2
29.3
    Industrial
19.5
19.8
19.6
    Residential/commercial
8.0
9.1
7.2
Mexico exports
4.7
4.7
4.2
Pipeline fuel use/losses
7.0
6.7
6.2
LNG pipeline receipts
3.1
3.3
2.7
Total demand
77.9
74.9
69.2

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
Tue, September 11, 2018
Change from
 
last week
last year
Oil rigs
867
0.8%
15.8%
Natural gas rigs
186
0.0%
0.0%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, September 11, 2018
Change from
 
last week
last year
Vertical
63
-3.1%
-6.0%
Horizontal
921
0.3%
15.8%
Directional
71
9.2%
-4.1%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-09-14
2018-09-07
change
East
709
679
30
Midwest
770
734
36
Mountain
170
166
4
Pacific
255
250
5
South Central
818
   806
12
Total
2,722
 2,636
86
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report"
Working gas in underground storage
Historical comparisons
Year ago
(9/14/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
830
-14.6
801
-11.5
Midwest
933
-17.5
910
-15.4
Mountain
211
-19.4
199
-14.6
Pacific
299
-14.7
328
-22.3
South Central
1,120
-27.0
1,071
-23.6
Total
3,394
-19.8
3,308
-17.7
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report"


Temperature – heating & cooling degree days (week ending Sep 13)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
21
0
-2
9
2
7
Middle Atlantic
18
5
-8
20
2
18
E N Central
21
3
-22
10
-8
10
W N Central
14
-9
-3
25
-1
3
South Atlantic
1
-2
-19
89
21
45
E S Central
1
-2
-24
77
19
58
W S Central
1
-1
-2
83
-8
35
Mountain
5
-23
4
65
20
-3
Pacific
5
-5
4
44
10
-10
United States
11
-2
-9
48
6
19
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Sep 13, 2018

Mean Temperature (F) 7-Day Mean ending Sep 13, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Sep 13, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Sep 13, 2018

Source: NOAA National Weather Service