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Natural Gas Weekly Update

for week ending November 7, 2018   |  Release date:  November 8, 2018   |  Next release:  November 15, 2018   |   Previous weeks


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

In the News:

Natural gas stocks end refill season lower than the five-year minimum in all regions

Working natural gas in storage in the Lower 48 states as of October 31 totaled 3,208 billion cubic feet (Bcf), according to interpolated data from EIA’s Weekly Natural Gas Storage Report released November 8. Inventories as of October 31 were 598 Bcf (16%) lower than the five-year (2013–17) end-of-October average and 569 Bcf (15%) lower than last year. This level is the lowest end-of-refill season level for working gas stocks since 2005, and inventory levels in all regions were lower than their five-year minimums. Although the natural gas storage injection season is traditionally defined as April 1 through October 31, injections often occur into November.

A low starting inventory level and below-average net injections of natural gas into storage both contributed to working natural gas stocks ending the refill season at this relatively low level. Working natural gas stocks ended the withdrawal season this year on March 31 at 1,360 Bcf—the fourth-lowest level reported since 2005. From April 1 through October 31, 2018, EIA estimates that net injections totaled 1,848 Bcf. Injections were 269 Bcf (13%) lower than the five-year average, despite being 97 Bcf (6%) higher than injections last year. This level was the fourth-lowest net injected volume for the refill season since 2005. The years that had lower net injections volumes—2016 (1,516 Bcf), 2017 (1,742 Bcf), and 2012 (1,456 Bcf)—were the only years where working gas levels were higher than 2,300 Bcf at the beginning of the refill season.

Lower-than-average temperatures in April 2018 resulted in uncharacteristic, continued withdrawals from storage during the month. Although net injections recovered in the following months, the net increases in working natural gas for the injection season were lower than the five-year average in almost all regions in the Lower 48 states. The South Central and Pacific regions posted the largest differences. In the Pacific region, net injections into storage fell 33 Bcf (26%) lower than the five-year average. In the South Central region, reported net injections totaled 201 Bcf (39%) lower than the five-year average, with about 85% of the shortfall occurring in the nonsalt facilities in the region. In the East and Midwest regions, net injections were each 18 Bcf lower than the five-year average (3%). The only region that matched its five-year average was the Mountain region.

Despite increased natural gas production, increased demand for natural gas reduced net injections into working gas storage. Natural gas production averaged 83.6 Bcf/day during the refill season in 2018, compared with 74.7 Bcf/day in 2017 during the same period. However, greater-than-average power sector consumption of natural gas during the late spring and summer, combined with increased natural gas demand from U.S. export markets, resulted in lower-than-average weekly net injections of natural gas into storage.

Overview:

(For the Week Ending Wednesday, November 7, 2018)

  • Natural gas spot prices rose at most locations this report week (Wednesday, October 31 to Wednesday, November 7). Henry Hub spot prices rose from $3.29 per million British thermal units (MMBtu) last Wednesday to $3.51/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the December 2018 contract price rose 29¢ from $3.261/MMBtu last Wednesday to $3.555/MMBtu yesterday.
  • Net injections to working gas totaled 65 billion cubic feet (Bcf) for the week ending November 2. Working natural gas stocks are 3,208 Bcf, which is 15% lower than the year-ago level and 16% lower than the five-year (2013–17) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 41¢/MMBtu, averaging $7.54/MMBtu for the week ending November 7. The price of natural gasoline, ethane, and propane fell by 10%, 7%, and 4%, respectively. The price of butane and isobutane remained flat week over week.
  • According to Baker Hughes, for the week ending Tuesday, October 30, the natural gas rig count remained flat at 193. The number of

more summary data

Prices/Supply/Demand:

The national benchmark average spot price increases for the fourth straight week. This report week (Wednesday, October 31 to Wednesday, November 7), Henry Hub spot prices rose 22¢ from $3.29/MMBtu last Wednesday to $3.51/MMBtu yesterday. This report week marks the fourth straight week of price increases; during that time, Henry Hub spot prices have risen 20%. Prices generally increased during the report week with lower-than-normal temperatures across the Northeast and low natural gas storage inventories.

At the Chicago Citygate, prices increased 57¢ from $3.11/MMBtu last Wednesday to $3.68/MMBtu yesterday. Prices at PG&E Citygate in Northern California rose 22¢, up from $3.78/MMBtu last Wednesday to $4.00/MMBtu yesterday. Prices at SoCal Citygate decreased 51¢ from $5.49/MMBtu last Wednesday to $4.98/MMBtu yesterday as a result of temperatures in Southern California that are expected to remain higher than average for the next few days.

Northeast prices increase. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 86¢ from $2.90/MMBtu last Wednesday to $3.76/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices increased 80¢ from $2.75/MMBtu last Wednesday to $3.55/MMBtu yesterday.

For the report week, temperatures in the New England Census division averaged 44°F, 3°F lower than the normal and 9°F lower than last year at this time. Heating degree days (HDD) in the New England Census division totaled 145, compared with 83 last year and a normal of 128.

During this report week, temperatures in the Middle Atlantic Census division averaged 47°F, 1°F lower than the normal and 3°F lower than last year at this time. Heating degree days in the Middle Atlantic Census division totaled 124, compared with 103 last year and a normal of 118.

Appalachia prices increase. Tennessee Zone 4 Marcellus spot prices increased 71¢ from $2.66/MMBtu last Wednesday to $3.37/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania rose 61¢ from $2.69/MMBtu last Wednesday to $3.30/MMBtu yesterday.

Discount at Permian Basin trading hub continues to grow. Prices at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged $1.56/MMBtu last Wednesday, $1.73/MMBtu lower than Henry Hub prices. Yesterday, prices at the Waha Hub averaged $1.19/MMBtu, $2.32/MMBtu lower than Henry Hub prices.

Nymex futures increase. At the Nymex, the price of the December 2018 contract increased 29¢, from $3.261/MMBtu last Wednesday to $3.555/MMBtu yesterday. The price of the 12-month strip averaging December 2018 through November 2019 futures contracts climbed 10¢ to $2.974/MMBtu.

Supply decreases as Canadian imports decline. According to data from PointLogic Energy, the average total supply of natural gas fell by 1% to 91.1 Bcf/d compared with the previous report week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 11% from last week.

Demand remains flat. Total U.S. consumption of natural gas was unchanged from the previous report week, averaging 67.9 Bcf/d according to data from PointLogic Energy. Natural gas consumed for power generation declined by 5% week over week. Industrial sector consumption stayed constant, averaging 22.5 Bcf/d. In the residential and commercial sectors, consumption increased by 6%. Natural gas exports to Mexico decreased 1%.

U.S. 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 18.2 Bcf departed the United States from November 1 to November 7. One LNG tanker (capacity 3.5 Bcf) was loading at Sabine Pass on Wednesday.

Natural gas feedstock deliveries to Sabine Pass terminal have been averaging more than 3 Bcf/d (on a weekly basis) since mid-October and reached 3.6 Bcf/d on November 3 according to data from IHS Markit OPIS Point Logic Energy, which suggests ongoing commissioning activities for Train 5. Cheniere Energy, the operator of Sabine Pass, filed a request last week with the Federal Energy Regulatory Commission for authorization to construct a third loading berth at the terminal. The first LNG production from Train 5 is expected before the end of this year.

Sempra Energy, the developer of Cameron liquefaction facility in Hackberry, Louisiana, announced last week that it began commissioning activities for Train 1. The project has three liquefaction trains under construction, each with a baseload capacity of 0.6 Bcf/d. The first exports from the facility are expected in early 2019.

Storage:

Net injections are higher than the five-year average. Net injections into storage totaled 65 Bcf for the week ending November 2, compared with the five-year (2013–17) average net injections of 48 Bcf and last year's net injections of 22 Bcf during the same week. Working gas stocks totaled 3,208 Bcf, which is 621 Bcf lower than the five-year average and 580 Bcf lower than last year at this time.

While working gas stocks’ deficit to the five-year average decreases, the deficit to the bottom of the five-year range increases. In the Lower 48 states, total working gas stocks are collectively 374 Bcf lower than the five-year minimum, and every storage region is currently lower than the bottom of the five-year range. The deficit to the bottom of the range increased in the Midwest region and the South Central region. As of this report week, the Midwest region is 73 Bcf (7%) lower than the five-year minimum, and the South Central region―including both salt and non-salt facilities―is 150 Bcf (14%) 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 natural gas spot price at the Henry Hub averaged $3.24/MMBtu, and the Nymex futures price of natural gas for delivery in January 2019 averaged $3.27/MMBtu, 3¢/MMBtu higher than the spot price. A year ago, the January contract was 29¢/MMBtu higher than the spot price.

Reported net injections into storage are slightly higher than the range of analysts’ expectations. According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas stocks ranged from net injections of 52 Bcf to 64 Bcf, with a median estimate of 58 Bcf. At the 10:30 a.m. release of the Weekly Natural Gas Storage Report, the price of the Nymex futures contract for November delivery at the Henry Hub fell 1¢/MMBtu to $3.52/MMBtu, with only 570 trades executed. The price varied in subsequent trading, averaging $3.353/MMBtu.

Temperatures are warmer than normal for the storage week. Temperatures in the Lower 48 states averaged 54 degrees Fahrenheit (°F), 2°F higher than normal and 4°F higher than last year at this time. Temperatures were 2°F higher than those reported for the previous week.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
01-Nov
Fri,
02-Nov
Mon,
05-Nov
Tue,
06-Nov
Wed,
07-Nov
Henry Hub
3.32
3.22
3.49
3.51
3.51
New York
2.80
3.07
3.19
3.37
3.55
Chicago
3.17
3.12
3.56
3.71
3.68
Cal. Comp. Avg.*
3.23
2.92
3.36
3.45
3.46
Futures ($/MMBtu)
December contract
3.237
3.284
3.567
3.555
3.555
January contract
3.275
3.310
3.575
3.583
3.569
*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: (11/1/18 - 11/7/18)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
97.6
98.1
85.6
Dry production
87.5
87.9
77.4
Net Canada imports
3.5
4.0
5.4
LNG pipeline deliveries
0.1
0.1
0.2
Total supply
91.1
91.9
83.0

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: (11/1/18 - 11/7/18)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
67.9
67.8
67.4
    Power
21.9
23.2
22.8
    Industrial
22.5
22.5
22.3
    Residential/commercial
23.4
22.1
22.3
Mexico exports
4.7
4.7
4.4
Pipeline fuel use/losses
6.4
7.4
6.5
LNG pipeline receipts
4.0
3.7
2.7
Total demand
83.0
83.6
81.1

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, October 30, 2018
Change from
 
last week
last year
Oil rigs
874
-0.1%
19.9%
Natural gas rigs
193
0.0%
14.2%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, October 30, 2018
Change from
 
last week
last year
Vertical
65
-4.4%
6.6%
Horizontal
929
0.2%
21.6%
Directional
73
0.0%
0.0%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2018-11-02
2018-10-26
change
East
831
826
5
Midwest
980
956
24
Mountain
182
180
2
Pacific
265
262
3
South Central
949
919
30
Total
3,208
 3,143
65
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report"
Working gas in underground storage
Historical comparisons
Year ago
(11/2/17)
5-year average
(2013-2017)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
925
-10.2
919
-9.6
Midwest
1,111
-11.8
1,093
-10.3
Mountain
224
-18.8
219
-16.9
Pacific
317
-16.4
351
-24.5
South Central
1,210
-21.6
1,246
-23.8
Total
3,788
-15.3
3,829
-16.2
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report"


Temperature – heating & cooling degree days (week ending Nov 01)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
145
17
62
0
0
0
Middle Atlantic
124
6
21
0
0
0
E N Central
124
-6
-43
0
-1
0
W N Central
111
-24
-74
0
-1
0
South Atlantic
71
-1
-11
15
-3
8
E S Central
56
-17
-48
3
0
3
W S Central
24
-14
-42
24
8
18
Mountain
96
-29
-12
8
3
-3
Pacific
23
-33
-6
5
3
-6
United States
86
-12
-21
7
1
3
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Nov 01, 2018

Mean Temperature (F) 7-Day Mean ending Nov 01, 2018

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Nov 01, 2018

Mean Temperature Anomaly (F) 7-Day Mean ending Nov 01, 2018

Source: NOAA National Weather Service