Natural Gas

Overview:

(For the week ending Wednesday, March 25, 2020)

• Natural gas spot prices rose at most locations this report week (Wednesday, March 18, to Wednesday, March 25). The Henry Hub spot price rose from $1.65 per million British thermal units (MMBtu) last Wednesday to $1.71/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the price of the April 2020 contract increased 6¢, from $1.604/MMBtu last Wednesday to $1.659/MMBtu yesterday. The price of the 12-month strip averaging April 2020 through March 2021 futures contracts climbed 10¢/MMBtu to $2.179/MMBtu.
• The net withdrawal from working gas totaled 29 billion cubic feet (Bcf) for the week ending March 20. Working natural gas stocks total 2,005 Bcf, which is 79% more than the year-ago level and 17% more than the five-year (2015–19) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 71¢/MMBtu, averaging $2.40/MMBtu for the week ending March 25. The prices of butane, natural gasoline, isobutane, propane, and ethane all fell, by 30%, 27%, 24%, 22%, and 18%, respectively. The deep decline in crude oil prices is a primary driver for the discounting across all hydrocarbon gas liquids.
• According to Baker Hughes, for the week ending Tuesday, March 17, the natural gas rig count decreased by 1 to 106. The number of oil-directed rigs fell by 19 to 664. The total rig count decreased by 20, and it now stands at 772.

more summary data

Prices/Supply/Demand:

Prices rise at most locations. This report week (Wednesday, March 18, to Wednesday, March 25), the Henry Hub spot price rose 6¢ from $1.65/MMBtu last Wednesday to a high of $1.71/MMBtu yesterday. Temperatures were generally close to normal across most of the Lower 48 states and slightly warmer than normal along the eastern seaboard. At the Chicago Citygate, the price increased 4¢ from a low of $1.49/MMBtu last Wednesday to $1.53/MMBtu yesterday.

California prices fall. The price at PG&E Citygate in Northern California fell 41¢, down from a high of $2.80/MMBtu last Wednesday to $2.39/MMBtu yesterday. The price at SoCal Citygate in Southern California decreased 20¢ from a high of $2.11/MMBtu last Wednesday to $1.91/MMBtu yesterday as net withdrawals from storage were minimal from Friday through the end of the report week.

Northeast prices rise. Temperatures in the Northeast were seasonal for this time of year and colder week on week, leading to increased prices in demand markets. At the Algonquin Citygate, which serves Boston-area consumers, the price went up 13¢ from $1.42/MMBtu last Wednesday to $1.55/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased 8¢ from $1.30/MMBtu last Wednesday to $1.38/MMBtu yesterday.

The Tennessee Zone 4 Marcellus spot price increased 13¢ from $1.19/MMBtu last Wednesday to $1.32/MMBtu yesterday. The price at Dominion South in southwest Pennsylvania rose 8¢ from $1.23/MMBtu last Wednesday to $1.31/MMBtu yesterday.

Permian Basin prices fall, widening the basis to the Henry Hub. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged $0.89/MMBtu last Wednesday, 76¢/MMBtu lower than the Henry Hub price. Yesterday, the price at the Waha Hub averaged $0.29/MMBtu, $1.42/MMBtu lower than the Henry Hub price. Prices reached a weekly low of $0.04/MMBtu on Tuesday. Takeaway capacity out of the Permian Basin was restricted by maintenance activity on the Gulf Coast Express pipeline on Wednesday, March 25, according to Kinder Morgan, putting downward pressure on prices.

Supply is flat. According to data from IHS Markit, the average total supply of natural gas remained the same as in the previous report week, averaging 98.9 Bcf/d. Dry natural gas production remained unchanged week over week. Average net imports from Canada increased by 6% from last week.

Demand falls, driven by power generation. Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from IHS Markit. Natural gas consumed for power generation declined by 2% week over week. Industrial sector consumption decreased by 2% week over week. In the residential and commercial sectors, consumption remained at last week's level, averaging 27.2 Bcf/d. Natural gas exports to Mexico increased 1%.

U.S. LNG exports decrease week over week. Fifteen LNG vessels (seven from Sabine Pass, three from Freeport, two each from Cameron and Corpus Christi, and one from Cove Point) with a combined LNG-carrying capacity of 55 Bcf departed the United States between March 19 and March 25, 2020, according to shipping data provided by Marine Traffic.

Storage:

The net withdrawal from storage totaled 29 Bcf for the week ending March 20, compared with the five-year (2015–19) average net withdrawal of 40 Bcf and last year's net withdrawal of 39 Bcf during the same week. Working natural gas stocks totaled 2,005 Bcf, which is 292 Bcf more than the five-year average and 888 Bcf more than last year at this time.

According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from a net withdrawal of 14 Bcf to 36 Bcf, with a median estimate of 24 Bcf.

The average rate of withdrawal from storage is 13% lower than the five-year average so far in the withdrawal season (November through March). If the rate of withdrawal from storage matched the five-year average of 1.4 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,989 Bcf on March 31, which is 292 Bcf higher than the five-year average of 1,697 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 Analysis Reports
• Short-Term Energy Outlook