Natural Gas

Overview:

(For the week ending Wednesday, November 3, 2021)

• Natural gas spot prices fell at most locations this report week (Wednesday, October 27 to Wednesday, November 3). The Henry Hub spot price fell from $5.86 per million British thermal units (MMBtu) last Wednesday to $5.59/MMBtu yesterday.
• International natural gas prices fell this report week. Bloomberg Finance, L.P. reports that swap prices for prompt month (December) liquefied natural gas (LNG) cargos in East Asia fell for the first time in 10 weeks. The weekly average fell to $31.59/MMBtu this report week, $2.46/MMBtu below last week’s average of $34.05/MMBtu, which was the highest weekly average on record since January 2020 (the first month for which comparable data are available). At the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas spot market in Europe, the day-ahead price fell this report week to a weekly average of $23.43/MMBtu, down $6.16/MMBtu (21%) from last week’s average of $29.60/MMBtu, the largest weekly decline on record going back to September 2007. In the same week last year (week ending November 4, 2020), prices in East Asia and at TTF were $6.90/MMBtu and $4.66/MMBtu, respectively.
• The November 2021 NYMEX contract expired last Wednesday at $6.202/MMBtu. The December 2021 NYMEX contract price decreased to $5.670/MMBtu, down 52.8 cents/MMBtu from last Wednesday to yesterday. The price of the 12-month strip averaging December 2021 through November 2022 futures contracts declined 26.4 cents/MMBtu to $4.561/MMBtu. The futures curve flattened this week as a result of futures contracts for delivery for the remaining balance-of-winter months (December through March), declining by more than futures contracts for delivery during the summer months (April through September). The balance-of-winter price declined on average by 49.2 cents/MMBtu, whereas the summer price declined by 15.1 cents/MMBtu.
• The net injections to working gas totaled 63 billion cubic feet (Bcf) for the week ending October 29. Working natural gas stocks totaled 3,611 Bcf, which is 8% lower than the year-ago level and 3% lower than the five-year (2016–2020) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 9 cents/MMBtu, averaging $12.06/MMBtu for the week ending November 3. Ethane prices fell 2% following a 1% decrease in the price of natural gas at the Houston Ship Channel. The ethane premium to natural gas narrowed by 2%, while ethylene prices increased by 4% for the week ending November 3. Natural gasoline prices fell in line with Brent Crude oil prices, which declined on average by 1% week over week. Prices of propane, normal butane, and isobutane remained relatively unchanged.
• According to Baker Hughes, for the week ending Tuesday, October 26, the natural gas rig count increased by 1 to 100 as a result of a one-rig gain in the Permian Basin. The number of oil-directed rigs rose by 1 to 444. The number of oil-directed rigs fell in the Permian Basin by one, offset by a one-rig gain each in the Williston and in the DJ-Niobrara Basins. The total rig count increased by 2, and it now stands at 544.

more summary data

Prices/Supply/Demand:

Gulf Coast prices fall as a result of relatively mild weather and a fairly balanced natural gas market this report week. This report week (Wednesday, October 27 to Wednesday, November 3), the Henry Hub spot price fell 27 cents from a weekly high of $5.86/MMBtu last Wednesday to $5.59/MMBtu yesterday, after reaching a weekly low of $5.17/MMBtu on Monday. Demand along the Gulf Coast rose on average week over week, driven primarily by higher feed gas deliveries to liquefied natural gas (LNG) export terminals in Southern Louisiana. IHS Markit estimates deliveries to LNG export terminals along the Gulf Coast increased week over week, driven by an estimated 0.6 billion cubic feet per day (Bcf/d) increase in feed gas deliveries to terminals in Louisiana, slightly offset by a decrease in feed gas deliveries to LNG terminals in Texas. Boardwalk Pipelines, operator of the Gulf South Pipeline (which delivers natural gas to the Freeport LNG terminal in Freeport, Texas), reports natural gas flows declined from more than 1.2 Bcf/d before October 31 to as low as 450 million cubic feet per day (MMcf/d) yesterday. Non-export demand in the region was relatively flat week over week. The relatively mild temperatures across the region also resulted in minor changes in demand in the Southeast, where consumption rose by 0.4 Bcf/d week over week, with a rise in the residential, commercial, and industrial sectors largely offset by a decline in demand for power generation.

Prices in the Midwest decrease this week. At the Chicago Citygate, the price decreased 28 cents from $5.82/MMBtu last Wednesday to $5.54/MMBtu yesterday, closely in line with the decrease in the Henry Hub price. The price at the Chicago Citygate fell from its weekly high on Wednesday, October 27 to a weekly low of $5.13/MMBtu on Monday, November 1 as temperatures in the Chicago area averaged 49°F, 1°F above normal. After Monday, temperatures decreased, averaging 38°F, 9°F below normal, coinciding with price increases Tuesday and Wednesday.

California prices decline more than prices in other regions as a result of mild temperatures and reduced demand. The price at PG&E Citygate in Northern California fell $1.17, down from a weekly high of $7.43/MMBtu last Wednesday to a weekly low of $6.26/MMBtu yesterday. The price in the PG&E territory fell by more than prices at hubs from which natural gas is sourced for delivery to PG&E. The price at Sumas on the Canada-Washington border fell 81 cents from $6.07/MMBtu last Wednesday to $5.26/MMBtu yesterday. The price at Opal Hub in southwest Wyoming, which is connected to the PG&E northern delivery point at Malin, Oregon, via the Ruby Pipeline, fell 58 cents from $5.95/MMBtu last Wednesday to $5.37/MMBtu yesterday. The price at Malin, Oregon, the northern delivery point into the PG&E service territory, fell 61 cents from $6.04/MMBtu last Wednesday to $5.43/MMBtu yesterday. IHS Markit estimates weekly average consumption in California fell by approximately 150 MMcf/d week over week, led by an almost 140 MMcf/d reduction in consumption in the residential and commercial sector.

The price at SoCal Citygate in Southern California decreased $1.11 from a weekly high of $6.90/MMBtu last Wednesday to a weekly low of $5.79/MMBtu yesterday. Temperatures in Southern California were relatively mild this report week. Daily averages in Riverside, inland from Los Angeles, were between the mid-60s to the mid-70s. The ability to ship natural gas from the Permian production region in West Texas to the Desert Southwest and Southern California is reduced by continuing impaired flows on the El Paso Natural Gas (EPNG) pipeline. The EPNG Line 2000 remains shut in as a result of a rupture that occurred in mid-August, which reduced flows on the segment from an average of 600 MMcf/d to zero. EPNG also issued a force majeure (Notice ID 613296) relating to Segment 635, which flows west out of the Permian Basin through New Mexico. Flows through Lincoln, New Mexico, which were already constrained by more than 66 MMcf/d due to compressor repair at the Belen Station, are now impaired by another 110 MMcf/d due to equipment failure at the Lincoln Compressor Station. The cumulative effect of these interruptions to flow on EPNG across the Desert Southwest has been an almost 500 MMcf/d impairment to the pipeline’s deliverability to the SoCal Gas service territory at the Ehrenberg, California, receipt point.

Northeast prices rise as cooler air moves into the region. At the Algonquin Citygate, which serves Boston-area consumers, the price went up 37 cents from $5.65/MMBtu last Wednesday to $6.02/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased 13 cents from $5.44/MMBtu last Wednesday to $5.57/MMBtu yesterday. Consumption of natural gas in the residential and commercial sectors in the Northeast increased 2.4 Bcf/d (45%) this report week, according to data from IHS Markit. Residential and commercial sector consumption of natural gas increased because of increased demand for space heating in the region. Temperatures in the Boston area averaged 51°F this week, resulting in 94 HDDs (heating degree days—a measure of heating demand), compared with 62 HDDs last week. Similarly, HDDs increased this report week in New York. Temperatures in New York City’s Central Park averaged 53°F this week, resulting in 83 HDDs, compared with 40 HDDs last week.

Prices in Appalachia decline as maintenance on the Tennessee Gas Pipeline begins. The Tennessee Zone 4 Marcellus spot price decreased 9 cents from $5.31/MMBtu last Wednesday to $5.22/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania fell 9 cents from $5.29/MMBtu last Wednesday to $5.20/MMBtu yesterday. Maintenance on the Tennessee Gas Pipeline (TGP) at Station 114 in West Virginia began on Monday, November 1 and is expected to conclude on November 7. We expect the maintenance to reduce flows by about 0.6 Bcf/d from the Appalachia region to the South. Net flows of natural gas from Appalachia to the Southern Corridor decreased by almost 1.0 Bcf/d this report week, according to data from IHS Markit.

Prices in the Permian production region decline in line with the price at the Henry Hub. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, fell 25 cents this report week, from $5.47/MMBtu last Wednesday to $5.22/MMBtu yesterday. The Waha Hub traded 37 cents below the Henry Hub price yesterday, compared to last Wednesday when it traded 39 cents below the Henry Hub price. IHS Markit reports flows out of the Permian Basin increased to all market areas except its southbound flows, reflecting reduced exports to Mexico this report week (see Demand section below).

U.S. supply of natural gas this report week is up slightly as a result of natural gas production rising for the second week in a row. According to data from IHS Markit, the average total supply of natural gas rose to 99.9 Bcf/d, which is an increase of 0.1% from the previous report week’s total of 99.7 Bcf/d. Nearly all of this increase was the result of dry natural gas production growing week over week by 0.5%, or 0.5 Bcf/d. Average net imports from Canada decreased by 6.2% to 5.5 Bcf/d from last week’s average of 5.8 Bcf/d, which was the highest weekly average for net imports from Canada since the third week of February.

U.S. natural gas consumption increases significantly week over week, led primarily by an increase in the residential/commercial sector. Total U.S. natural gas demand rose by 5.7% (5.2 Bcf/d) week over week, according to data from IHS Markit, which marks a second consecutive week of significantly increasing demand. The largest increase in demand was in the residential and commercial sector, which rose 31.5% (5.4 Bcf/d), as cooler temperatures prevailed in several areas of the country ahead of the winter heating season. NOAA reported mostly normal temperatures across the estern United States, but a large region of below-normal daytime temperatures across the Central United States and south into the Southeastern states, as far south as northern Florida, were also reported. Natural gas consumed for power generation decreased by 3.0% (0.9 Bcf/d) week over week, and consumption in the industrial sector increased by 2.9% (0.6 Bcf/d) week over week. Natural gas exports to Mexico decreased 8.3% to 5.4 Bcf/d, the lowest average weekly flows since the first week of March. Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 10.9 Bcf/d, or about 0.3 Bcf/d higher than last week.

U.S. LNG exports have increased this week from the last report week. Twenty-two LNG vessels (six from Sabine Pass, five each from Corpus Christi and Freeport, four from Cameron, and one each from Cove Point and Elba Island) with a combined LNG-carrying capacity of 80 Bcf departed the United States between October 28 and November 3, 2021, according to shipping data provided by Bloomberg Finance, L.P.

Storage:

The net injections into storage totaled 63 Bcf for the week ending October 29, compared with the five-year (2016–2020) average net injections of 38 Bcf and last year's net withdrawals of 27 Bcf during the same week. Working natural gas stocks totaled 3,611 Bcf, which is 101 Bcf lower than the five-year average and 313 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 injections of 57 Bcf to 74 Bcf, with a median estimate of 66 Bcf.

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