Natural Gas

Overview:

(For the week ending Wednesday, January 20, 2021)

• Natural gas spot prices fell at most locations this report week (Wednesday, January 13 to Wednesday, January 20). The Henry Hub spot price fell from $2.75 per million British thermal units (MMBtu) last Wednesday to $2.42/MMBtu yesterday.
• At the New York Mercantile Exchange (Nymex), the price of the February 2021 contract decreased 19¢, from $2.727/MMBtu last Wednesday to $2.539/MMBtu yesterday. The price of the 12-month strip averaging February 2021 through January 2022 futures contracts declined 10¢/MMBtu to $2.738/MMBtu.
• The net withdrawals from working gas totaled 187 billion cubic feet (Bcf) for the week ending January 15. Working natural gas stocks totaled 3,009 Bcf, which is 1% more than the year-ago level and 7% more than the five-year (2016–2021) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 35¢/MMBtu, averaging $7.35/MMBtu for the week ending January 20. The prices of natural gasoline, ethane, butane, isobutane, and propane all rose, by 1%, 2%, 5%, 5%, and 8%, respectively
• According to Baker Hughes, for the week ending Tuesday, January 12, the natural gas rig count increased by 1 to 85. The number of oil-directed rigs rose by 12 to 287. The total rig count increased by 13, and it now stands at 373.

more summary data

Prices/Supply/Demand:

Prices are down across the Lower 48 states amid warmer than normal temperatures. This report week (Wednesday, January 13 to Wednesday, January 20), the Henry Hub spot price fell 33¢ from a high of $2.75/MMBtu last Wednesday to a low of $2.42/MMBtu yesterday. Temperatures during the report week were warmer than normal across most of the Lower 48 states and colder than normal in the Southeast. At the Chicago Citygate, the price decreased 27¢ from a high of $2.63/MMBtu last Wednesday to a low of $2.36/MMBtu yesterday.

California prices are down as Southern California posts net injections into underground storage. The price at SoCal Citygate in Southern California decreased 56¢ from a high of $3.49/MMBtu last Wednesday to a low of $2.93/MMBtu yesterday amid net injections into underground storage nearly every day during this report week. The price at PG&E Citygate in Northern California fell 31¢, down from a high of $3.67/MMBtu last Wednesday to a low of $3.36/MMBtu yesterday.

Northeast prices fall. At the Algonquin Citygate, which serves Boston-area consumers, the price went down $1.43 from $4.47/MMBtu last Wednesday to $3.04/MMBtu yesterday. Algonquin Gas Transmission declared a force majeure on Tuesday because of an unplanned outage on its G System 12" Line G-1 V/S 7, located in Massachusetts. According to Natural Gas intelligence, flows on the G System have averaged 0.3 Bcf/d in the week leading up to the outage, approximately 0.09 Bcf/d less than current operational capacity limitations. Because of mild weather in the region, Natural Gas Intelligence reports that the effects of the force majeure are expected to be limited. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price decreased 42¢ from $2.82/MMBtu last Wednesday to a low of $2.40/MMBtu yesterday.

The Tennessee Zone 4 Marcellus spot price decreased 27¢ from $2.40/MMBtu last Wednesday to $2.13/MMBtu yesterday. The price at Dominion South in southwest Pennsylvania fell 25¢ from $2.43/MMBtu last Wednesday to $2.18/MMBtu yesterday.

Permian Basin discount to the Henry Hub narrows. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged a high of $2.61/MMBtu last Wednesday, 14¢/MMBtu lower than the Henry Hub price. Yesterday, the price at the Waha Hub averaged a low of $2.32/MMBtu, 10¢/MMBtu lower than the Henry Hub price. S&P Platts reports that flows into the Permian Highway Pipeline from the El Paso Natural Gas system reached a new high of nearly 0.4 Bcf/d on January 20, prompting higher prices at the Waha Hub.

Supply is down because of lower imports from Canada. According to data from IHS Markit, the average total supply of natural gas fell by 0.4% compared with the previous report week. Dry natural gas production grew by 0.1% compared with the previous report week. Average net imports from Canada decreased by 6.1% from last week amid temperatures that were much warmer than normal in northeastern markets.

Demand declines driven by decrease in power generation. Total U.S. consumption of natural gas fell by 5.4% compared with the previous report week, according to data from IHS Markit. Natural gas consumed for power generation declined by 9.9% week over week. In the residential and commercial sectors, consumption declined by 4.6%. Industrial sector consumption decreased by 1.4% week over week. Natural gas exports to Mexico decreased 0.6%. Natural gas deliveries to U.S. liquefied natural gas (LNG) export facilities (LNG pipeline receipts) averaged 10.9 Bcf/d, or 0.08 Bcf/d higher than last week.

U.S. LNG exports increase week over week. Twenty LNG vessels (seven from Sabine Pass, four each from Cameron and Corpus Christi, three from Freeport, and two from Cove Point) with a combined LNG-carrying capacity of 72 Bcf departed the United States between January 14 and January 20, 2021, according to shipping data provided by Bloomberg Finance, L.P. Two LNG tankers were loading on Wednesday—one at Sabine Pass LNG and one at Freeport LNG.

Storage:

The net withdrawals from storage totaled 187 Bcf for the week ending January 15, compared with the five-year (2016–2021) average net withdrawals of 167 Bcf and last year's net withdrawals of 97 Bcf during the same week. Working natural gas stocks totaled 3,009 Bcf, which is 198 Bcf more than the five-year average and 36 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 net withdrawals of 158 Bcf to 195 Bcf, with a median estimate of 180 Bcf.

The average rate of withdrawals from storage is the same as 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 13.4 Bcf/d for the remainder of the withdrawal season, the total inventory would be 2,004 Bcf on March 31, which is 198 Bcf higher than the five-year average of 1,806 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