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Natural Gas Weekly Update

for week ending February 27, 2019   |  Release date:  February 28, 2019   |  Next release:  March 7, 2019   |   Previous weeks


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

In the News:

Southern California natural gas inventories decrease significantly during colder-than-normal February

Natural gas storage inventories in Southern California decreased from 57.7 billion cubic feet (Bcf) on February 1 to 40.0 Bcf on February 25, according to the Southern California Gas Company (SoCalGas) ENVOY website, a 31% reduction. In comparison, Southern California storage volumes decreased by only 7.5 Bcf in all of February 2018. The 2019 storage decrease was chiefly a result of high natural gas demand in Southern California caused by colder-than-normal temperatures, as well as constraints on pipelines that bring natural gas into the region.

Temperatures in Los Angeles averaged 53 degrees Fahrenheit (°F) February 1–25 (equivalent to 12 heating degree days), 6°F lower than February 2018 and 7°F lower than the 30-year (1981–2010) normal for February. According to Genscape, daily sendout (demand) on the SoCalGas system averaged 3.4 Bcf/d February 1–25, more than any other February since at least 2007 and 0.5 Bcf/d higher than in 2018. According to ENVOY, the total capacity of pipelines to flow natural gas from out of state into the SoCalGas system was about 2.8 Bcf/d during February 2019 as continued maintenance leaves capacities reduced. Natural gas drawn from storage facilities made up the difference between regional demand and constrained transportation capacity.

Because of the magnitude of this shortfall, SoCalGas withdrew natural gas from the Aliso Canyon storage facility throughout February. SoCalGas can only withdraw natural gas from Aliso Canyon as a last resort, according to the California Public Utility Commission’s Aliso Canyon Withdrawal Protocol.

SoCalGas also curbed natural gas use when demand was greatest. SoCalGas issued mandatory electric generation curtailment orders from February 6–8 and February 20–21, periods when the coldest weather occurred (the latter period included snowfall in Los Angeles for the first time since 1962). These curtailment orders required reductions in the use of natural gas for power generation, giving priority to customers that use natural gas for heating.

The high demand for and limited availability of natural gas has led to elevated spot prices in Southern California. Prices at SoCal Citygate averaged $11.43 per million British thermal units (MMBtu) February 1–25, compared to $4.80/MMBtu in January 2019 and $7.74/MMBtu in December 2018. Prices were highest during the times of the month when temperatures were lowest and demand peaked; prices averaged $20.34/MMBtu on February 6 and $22.29/MMBtu on February 20.

The 2019 net withdrawals through February 25 already qualify as the largest February decrease since 2014, when Southern California inventories decreased from 55.7 Bcf to 21.3 Bcf (62%) over the month. In contrast to 2019, the 2014 withdrawal was less related to local weather. Instead, high spot prices elsewhere in the country prompted Southern California to use its storage volumes instead of buying expensive natural gas on the spot market.

Overview:

(For the week ending Wednesday, February 27, 2019)

  • Natural gas spot prices rose at most locations this report week (Wednesday, February 20 to Wednesday, February 27). Henry Hub spot prices rose from $2.71/MMBtu last Wednesday to $2.85/MMBtu yesterday.
  • At the Nymex, the March 2019 contract expired Tuesday at $2.855/MMBtu, up 22¢/MMBtu from last Wednesday. The April 2019 contract increased to $2.799/MMBtu, up 13¢/MMBtu from last Wednesday to yesterday. The price of the 12-month strip averaging April 2019 through March 2020 futures contracts climbed 9¢/MMBtu to $2.938/MMBtu.
  • Net withdrawals from working gas totaled 166 Bcf for the week ending February 22. Working natural gas stocks are 1,539 Bcf, which is 9% lower than the year-ago level and 22% lower than the five-year (2014–18) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 2¢/MMBtu, averaging $6.78/MMBtu for the week ending February 27. The price of ethane, butane, and isobutane fell by 1%, 5%, and 5%, respectively. The price of natural gasoline and propane rose by 2% and 4%, respectively.
  • According to Baker Hughes, for the week ending Tuesday, February 19, the natural gas rig count remained flat at 194. The number of oil-directed rigs fell by 4 to 853. The total rig count decreased by 4, and it now stands at 1,047.

more summary data

Prices/Supply/Demand:

Prices rise across most of the country as temperatures drop. This report week (Wednesday, February 20 to Wednesday, February 27), Henry Hub spot prices rose 14¢ from $2.71/MMBtu last Wednesday to $2.85/MMBtu yesterday as meteorologists forecasted colder-than-normal weather to persist across the Lower 48 states through early March. At the Chicago Citygate, prices increased 27¢ from $2.68/MMBtu last Wednesday to $2.95/MMBtu yesterday. Temperatures were colder than normal west of the Rockies and warmer than normal on the East Coast during the report week.

Price pressure in California abates. Prices recovered from last week when California experienced high demand as a result of cold weather amid supply constraints, especially in Southern California. Prices at SoCal Citygate decreased $17.38 from their weekly high of $22.29/MMBtu last Wednesday to $4.91/MMBtu yesterday. At PG&E Citygate in Northern California, prices fell $4.03, down from their weekly high of $8.44/MMBtu last Wednesday to $4.41/MMBtu yesterday.

Northeast prices rise with cold temperatures at the end of the report week. At the Algonquin Citygate, which serves Boston-area consumers, prices ended the week higher than the previous week as a result of cold temperatures and increased demand. Prices went up $2.77 from $2.94/MMBtu last Wednesday to $5.71/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices increased 23¢ from $2.69/MMBtu last Wednesday to $2.92/MMBtu yesterday.

Tennessee Zone 4 Marcellus spot prices increased 21¢ from $2.52/MMBtu last Wednesday to $2.73/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania rose 31¢ from $2.43/MMBtu last Wednesday to $2.74/MMBtu yesterday.

Permian Basin prices fall as a force majeure further constrains takeaway capacity. The Natural Gas Pipeline Company declared a force majeure on Monday for Segment 8 of its northbound Amarillo line because of a suspected leak. The constraint on takeaway capacity out of the Permian put downward pressure on prices. Prices at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged $1.74/MMBtu last Wednesday, 97¢/MMBtu lower than Henry Hub prices. Yesterday, prices at the Waha Hub reached their weekly low of 98¢/MMBtu, $1.87/MMBtu lower than Henry Hub prices. The force majeure was lifted today.

Supply flat. According to data from PointLogic Energy, the average total supply of natural gas remained the same as in the previous report week, averaging 93.7 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 2% from last week.

Demand decreases. Total U.S. consumption of natural gas fell by 3% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined by 3% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 3%. Natural gas exports to Mexico increased 2%.

U.S. LNG exports decrease week over week. Eight LNG vessels (six from Sabine Pass, one from Cove Point, and one from Corpus Christi) with a combined LNG-carrying capacity of 27.9 Bcf departed the United States from February 20 to February 27, according to shipping data compiled by Bloomberg.

Cheniere Energy, the owner and operator for Sabine Pass and Corpus Christi, released its fourth-quarter and full-year 2018 results. According to the report, as of February 20, more than 575 cumulative LNG cargoes have been produced, loaded, and exported to 32 countries from the two liquefaction facilities since production began in 2016. Almost half of these cargos―270―were exported in 2018.

Storage:

Net withdrawals from storage totaled 166 Bcf for the week ending February 22, compared with the five-year (2014–18) average net withdrawals of 104 Bcf and last year's net withdrawals of 85 Bcf during the same week. Working gas stocks totaled 1,539 Bcf, which is 424 Bcf lower than the five-year average and 154 Bcf lower than last year at this time.

According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas stocks ranged from net withdrawals of 151 Bcf to 180 Bcf, with a median estimate of 171 Bcf.

The average rate of net withdrawals from storage is 11% lower than the five-year average so far in the withdrawal season (November through March). If the rate of withdrawals from storage matched the five-year average of 8.8 Bcf/d for the remainder of the withdrawal season, total inventories would be 1,212 Bcf on March 31, which is 424 Bcf lower than the five-year average of 1,636 Bcf for that time of year.

More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
21-Feb
Fri,
22-Feb
Mon,
25-Feb
Tue,
26-Feb
Wed,
27-Feb
Henry Hub 2.71 2.71 2.71 2.71 2.71
New York 2.79 2.67 3.18 3.17 2.92
Chicago 2.69 2.71 2.94 3.00 2.95
Cal. Comp. Avg.* 5.74 4.15 4.64 4.51 4.03
Futures ($/MMBtu)
March Contract 2.697 2.717 2.836 2.855 Expired
April Contract 2.724 2.739 2.815 2.796 2.799
May Contract 2.744 2.759 2.826 2.811 2.813
*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: (2/21/19 - 2/27/19)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
99.8
99.5
87.6
Dry production
88.8
88.6
78.2
Net Canada imports
4.7
4.6
5.6
LNG pipeline deliveries
0.2
0.4
0.4
Total supply
93.7
93.6
84.1

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline deliveries represent natural gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (2/21/19 - 2/27/19)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
90.1
92.7
78.1
    Power
24.4
25.2
24.1
    Industrial
23.2
23.5
22.2
    Residential/commercial
42.6
44.1
31.8
Mexico exports
4.8
4.6
4.3
Pipeline fuel use/losses
6.8
6.9
6.0
LNG pipeline receipts
5.2
4.8
3.4
Total demand
106.9
109.0
91.8

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, February 19, 2019
Change from
 
last week
last year
Oil rigs
853
-0.5%
6.8%
Natural gas rigs
194
0.0%
8.4%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, February 19, 2019
Change from
 
last week
last year
Vertical
0
0.0%
0.0%
Horizontal
23
-8.0%
-4.2%
Directional
68
-2.9%
-1.4%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2019-02-22
2019-02-15
change
East
354
395
-41
Midwest
385
436
-51
Mountain
   79
87
-8
Pacific
122
138
-16
South Central
598
649
-51
Total
  1,539
 1,705
-166
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report
Working gas in underground storage
Historical comparisons
Year ago
(2/22/18)
5-year average
(2014-2018)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
385
-8.1
403
-12.2
Midwest
402
-4.2
468
-17.7
Mountain
103
-23.3
126
-37.3
Pacific
191
-36.1
213
-42.7
South Central
611
-2.1
755
-20.8
Total
1,693
-9.1
1,963
-21.6
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report


Temperature – heating & cooling degree days (week ending Feb 21)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
252
-1
74
0
0
0
Middle Atlantic
233
-8
84
0
0
0
E N Central
278
18
93
0
0
0
W N Central
342
80
108
0
0
0
South Atlantic
132
-23
70
18
10
-1
E S Central
133
-19
84
0
-1
-5
W S Central
115
13
65
3
-1
-14
Mountain
254
58
45
0
-1
0
Pacific
162
61
40
0
0
0
United States
216
23
74
4
2
-2
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-day mean ending Feb 21, 2019

Mean Temperature (F) 7-Day Mean ending Feb 21, 2019

Source: National Oceanic and Atmospheric Administration

Deviation between average and normal (°F)

7-day mean ending Feb 21, 2019

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 21, 2019

Source: National Oceanic and Atmospheric Administration