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Natural Gas Weekly Update

for week ending February 10, 2021   |  Release date:  February 11, 2021   |  Next release:  February 18, 2021   |   Previous weeks


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

In the News:

Warm weather and high storage levels kept natural gas prices low this winter

From October 2020 to January 2021, the price of natural gas at the benchmark Henry Hub in Louisiana averaged $2.52 per million British thermal units (MMBtu), according to data from Natural Gas Intelligence. Aside from October 2019–January 2020, when the Henry Hub price averaged $2.25/MMBtu, October 2020–January 2021 had the lowest October to January average Henry Hub price since the winter of 2015–16. Since the start of this winter heating season, mild weather, high levels of natural gas in storage, and relatively strong natural gas production contributed to low prices at Henry Hub and other natural gas pricing points across the United States. EIA considers the winter heating season to run from October through March.

National Oceanic and Atmospheric Administration (NOAA) reported 2,344 natural gas-weighted heating degree days (HDDs) for the United States from October 2020–January 2021, a decline of 22 HDDs (1%) from the 10-year (2011–2020) October–January average. The 2020–21 winter has been milder than last year’s winter as of the end of January. Although January 2020 was the second-warmest January since 2000, the 2020–21 winter heating season has had 145 fewer HDDs than last year’s winter heating season through the end of January.

Working natural gas in storage began the withdrawal season (November–March) at 3,920 billion cubic feet, the third-highest level recorded at the start of the withdrawal season, and the mild weather has limited withdrawals and kept natural gas storage levels higher than the five-year (2016–20) average. In addition, dry natural gas production so far this withdrawal season averaged 90.9 billion cubic feet per day (Bcf/d), according to IHS Markit estimates, which is second only to the record-high average production of 95.6 Bcf/d during the same period in 2019–20.

Natural gas prices in the United States tend to spike in winter months, particularly in New England, when natural gas supply becomes constrained during cold spells, resulting in correspondingly higher prices at the Algonquin Citygate near Boston, Massachusetts. This winter, however, the Algonquin Citygate price averaged $4.43/MMBtu between December and January, 38% lower than the five-year (2016–2020) December and January average of $7.18/MMBtu, and only exceeded the five-year average price on eight days during this period.

Although the winter weather through January 2021 was mild, February weather began considerably colder. NOAA forecasts below-normal temperatures across most of the United States through the second week of February amid a polar vortex affecting a large portion of the United States. Based on these expectations, the prices at Henry Hub increased to $3.39/MMBtu as of February 5.

Overview:

(For the week ending Wednesday, February 10, 2021)

  • Natural gas spot prices rose at most locations this report week (Wednesday, February 3 to Wednesday, February 10) in response to a prolonged cold-weather trend developing across most Lower 48 states. Below-freezing temperatures are forecast as far south as the Gulf coast. The Henry Hub spot price rose from $2.91 per million British thermal units (MMBtu) last Wednesday to $3.68/MMBtu yesterday.
  • At the New York Mercantile Exchange (NYMEX), the price of the March 2021 contract increased 12¢, from $2.789/MMBtu last Wednesday to $2.911/MMBtu yesterday. The price of the 12-month strip averaging March 2021 through February 2022 futures contracts climbed 10¢/MMBtu to $3.037/MMBtu.
  • The net withdrawals from working gas totaled 171 billion cubic feet (Bcf) for the week ending February 5. Working natural gas stocks totaled 2,518 Bcf, which is the same as the year-ago level and 6% more than the five-year (2016–2021) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 10¢/MMBtu, averaging $7.41/MMBtu for the week ending February 10. The price of natural gasoline rose by 3%. The prices of propane fell by 4% in response to lower export demand, and ethane, butane, and isobutane all fell by 1%.
  • According to Baker Hughes, for the week ending Tuesday, February 2, the natural gas rig count increased by 4 to 92. The number of oil-directed rigs rose by 4 to 299. The total rig count increased by 8, and it now stands at 392.

more summary data

Prices/Supply/Demand:

Prices rise across the country amid cold temperatures. This report week (Wednesday, February 3 to Wednesday, February 10), the Henry Hub spot price rose 77¢ from $2.91/MMBtu last Wednesday to a weekly high of $3.68/MMBtu yesterday. At the Chicago Citygate, the price increased $1.14 from $2.85/MMBtu last Wednesday to a weekly high of $3.99/MMBtu yesterday as a result of the average temperatures in the city dropping more than 18°F lower than normal for five consecutive days (Friday to Wednesday).

California prices rise. Prices throughout the West reached daily highs yesterday. The price at PG&E Citygate in Northern California rose 56¢, up from $3.55/MMBtu last Wednesday to $4.11/MMBtu yesterday. The price at SoCal Citygate in Southern California increased $1.79 from $3.18/MMBtu last Wednesday to $4.97/MMBtu yesterday.

Northeast prices remain elevated. At the Algonquin Citygate, which serves Boston-area consumers, the price went down 50¢ from a high of $12.06/MMBtu last Wednesday to $11.56/MMBtu yesterday, after dropping to a low of $7.42/MMBtu last Thursday, as cold temperatures returned to the region. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased $1.52 from $3.17/MMBtu last Wednesday to a weekly high of $4.69/MMBtu yesterday.

Spot prices in the Appalachia production region also peaked yesterday. The Tennessee Zone 4 Marcellus spot price increased 56¢ from $2.65/MMBtu last Wednesday to $3.21/MMBtu yesterday. The price at Dominion South in southwest Pennsylvania rose 60¢ from $2.72/MMBtu last Wednesday to $3.32/MMBtu yesterday.

Permian Basin prices trade at the highest premium to the Henry Hub since March 3, 2014. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged $2.77/MMBtu last Wednesday, 14¢/MMBtu lower than the Henry Hub price. Strong increases in weather-driven in-region demand, in addition to the recent buildout of natural gas pipeline takeaway capacity, increased natural gas spot prices at the Waha Hub, which reached an average of $4.54/MMBtu yesterday, 86¢/MMBtu more the Henry Hub price.

Supply falls. According to data from IHS Markit, the average total supply of natural gas fell by 0.6% compared with the previous report week. Dry natural gas production decreased by 0.2% compared with the previous report week. Average net imports from Canada decreased by 4.8% from last week. An outage on Enbridge West Coast Transmission’s Compressor Station 2 in British Columbia reduced flows on the pipe, affecting natural gas supply across the border into Washington State.

Demand rises driven by demand for space heating. Total U.S. consumption of natural gas rose by 3.6% compared with the previous report week, according to data from IHS Markit. Natural gas consumed for power generation declined by 2.5% week over week. In the residential and commercial sectors, consumption increased by 7.9%. Industrial sector consumption increased by 3.2% week over week. Natural gas exports to Mexico increased 3.5%. Natural gas deliveries to U.S. liquefied natural gas (LNG) export facilities (LNG pipeline receipts) averaged 11.0 Bcf/d, or 0.13 Bcf/d higher than last week.

U.S. LNG exports decrease week over week. Nineteen LNG vessels (seven from Sabine Pass, four each from Corpus Christi and Freeport, three from Cameron, and one from Cove Point) with a combined LNG-carrying capacity of 69 Bcf departed the United States between February 4 and February 10, 2021, according to shipping data provided by Bloomberg Finance, L.P.

Storage:

The net withdrawals from storage totaled 171 Bcf for the week ending February 5, compared with the five-year (2016–2021) average net withdrawals of 125 Bcf and last year's net withdrawals of 121 Bcf during the same week. Working natural gas stocks totaled 2,518 Bcf, which is 152 Bcf more than the five-year average and 9 Bcf lower 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 170 Bcf to 192 Bcf, with a median estimate of 181 Bcf.

The average rate of withdrawals from storage is 3% higher 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 10.4 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,958 Bcf on March 31, which is 152 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 spot prices
Spot Prices ($/MMBtu)
Thu,
04-Feb
Fri,
05-Feb
Mon,
08-Feb
Tue,
09-Feb
Wed,
10-Feb
Henry Hub
2.92
3.39
3.18
3.20
3.68
New York
3.04
4.52
4.11
4.18
4.69
Chicago
2.95
3.50
3.18
3.28
3.99
Cal. Comp. Avg.*
3.14
3.56
3.51
3.50
4.28
Futures ($/MMBtu)
March contract
2.935
2.863
2.882
2.835
2.911
April contract
2.889
2.841
2.862
2.823
2.879
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (2/4/21 - 2/10/21)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
102.1
102.3
104.7
Dry production
90.3
90.5
92.5
Net Canada imports
6.0
6.3
5.4
LNG pipeline deliveries
0.2
0.3
0.2
Total supply
96.5
97.2
98.1

Source: IHS Markit
Note: LNG pipeline deliveries represent natural gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (2/4/21 - 2/10/21)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
98.9
95.4
97.0
    Power
26.9
27.6
30.8
    Industrial
25.9
25.1
25.1
    Residential/commercial
46.0
42.6
41.1
Mexico exports
5.7
5.5
5.0
Pipeline fuel use/losses
7.2
7.0
7.3
LNG pipeline receipts
11.0
10.9
8.9
Total demand
122.8
118.8
118.2

Source: IHS Markit
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 02, 2021
Change from
 
last week
last year
Oil rigs
299
1.4%
-55.8%
Natural gas rigs
92
4.5%
-17.1%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Tue, February 02, 2021
Change from
 
last week
last year
Vertical
20
-9.1%
-39.4%
Horizontal
354
2.9%
-50.2%
Directional
18
0.0%
-60.9%
Source: Baker Hughes Co.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2021-02-05
2021-01-29
change
East
529
582
-53
Midwest
666
719
-53
Mountain
 150
 158
-8
Pacific
257
261
-4
South Central
915
970
-55
Total
2,518
2,689
-171
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report
Working gas in underground storage
Historical comparisons
Year ago
(2/5/20)
5-year average
(2016-2020)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
577
-8.3
525
0.8
Midwest
703
-5.3
626
6.4
Mountain
129
16.3
132
13.6
Pacific
204
26.0
209
23.0
South Central
914
0.1
874
4.7
Total
2,527
-0.4
2,366
6.4
Source: Form EIA-912, Weekly Underground Natural Gas Storage Report


Temperature – heating & cooling degree days (week ending Feb 04)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
297
24
72
0
0
0
Middle Atlantic
275
13
70
0
0
0
E N Central
276
-13
69
0
0
0
W N Central
253
-48
22
0
0
0
South Atlantic
200
24
66
2
-5
-2
E S Central
183
4
62
0
-1
0
W S Central
92
-37
-3
3
-1
1
Mountain
182
-39
-23
1
0
1
Pacific
118
6
14
0
0
0
United States
210
-7
41
1
-1
0
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-day mean ending Feb 04, 2021

Mean Temperature (F) 7-Day Mean ending Feb 04, 2021

Source: National Oceanic and Atmospheric Administration

Deviation between average and normal (°F)

7-day mean ending Feb 04, 2021

Mean Temperature Anomaly (F) 7-Day Mean ending Feb 04, 2021

Source: National Oceanic and Atmospheric Administration