Natural Gas

Overview:

(For the week ending Wednesday, March 2, 2022)

• Spot Prices: Natural gas spot price movements were mixed this report week (Wednesday, February 23 to Wednesday, March 2). The Henry Hub spot price rose from $4.57 per million British thermal units (MMBtu) last Wednesday to $4.65/MMBtu yesterday.
• International Spot Prices: International natural gas spot prices rose this report week. Bloomberg Finance, L.P. reports that swap prices for liquefied natural gas (LNG) cargos in East Asia for the balance of March rose $3.37 to a weekly average of $27.75/MMBtu from $24.39/MMBtu last week. At the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas spot market in Europe, the day-ahead prices rose $15.34 to a weekly average of $41.06/MMBtu amid the Russian invasion of Ukraine and resulting uncertainty in European natural gas markets. In the same week last year (week ending March 3, 2021), prices in East Asia and at TTF were $5.93/MMBtu and $5.70/MMBtu, respectively.
• Futures: The March 2022 NYMEX contract expired Thursday, February 24, at $4.568/MMBtu, down 6 cents from last Wednesday. The April 2022 NYMEX contract price increased to $4.762/MMBtu, up 17 cents from last Wednesday to yesterday. The price of the 12-month strip averaging April 2022 through March 2023 futures contracts climbed 16 cents to $4.890/MMBtu.
• Storage: The net withdrawals from working gas totaled 139 billion cubic feet (Bcf) for the week ending February 25. Working natural gas stocks totaled 1,643 Bcf, which is 12% lower than the year-ago level and 13% lower than the five-year (2017–2021) average for this week.
• NGPLs: The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 66 cents/MMBtu, averaging $12.39/MMBtu for the week ending March 2. Prices of natural gasoline and butanes rose, following the price of Brent crude oil, which rose 10% over the week. The natural gasoline price increased by 9%, and the prices of normal butane and isobutane both rose by 7%. The propane price rose by 4%, widening the propane discount to crude oil by $1.09/MMBtu (75%) to $2.53/MMBtu. The natural gas price at the Houston Ship Channel fell by 1%, while the ethane price increased by 5% over the week. The ethane premium to natural gas increased by 33 cents/MMBtu (21%) to $1.90/MMBtu.
• Rigs: According to Baker Hughes, for the week ending Tuesday, February 22, the natural gas rig count increased by 3 to 127 rigs. All 3 rigs this report week were added in the Haynesville, where 11 rigs have been added since the start of 2022. The number of oil-directed rigs increased by 2 to 522 rigs. The Permian Basin added three rigs, the Cana Woodford added two rigs, and one rig was added in the Mississippian shale play. The Granite Wash and an unspecified region each lost two rigs. The total rig count increased by 5 and now stands at 650, the highest level since April 3, 2020, and 248 rigs more than last year at this time.

more summary data

Prices/Supply/Demand:

Prices on the Gulf Coast rise slightly, with cooler temperatures. This report week (Wednesday, February 23 through Wednesday, March 2), the Henry Hub spot price rose 8 cents from $4.57/MMBtu last Wednesday to $4.65/MMBtu yesterday. Natural gas consumption in South Texas increased by 0.9 Bcf/d (11%) this report week, according to data from PointLogic. Temperatures along the Gulf Coast of Texas were colder than normal this report week. In Houston, Texas, the average temperature was 49°F, or 10°F lower than last week, leading to 54 more HDDs than last week. This report week, feedgas to liquefied natural gas (LNG) export terminals in South Texas increased 0.8 Bcf/d (22%) and feedgas to LNG terminals in South Louisiana decreased by 0.4 Bcf/d (6%), according to data from PointLogic. Feedgas at Freeport LNG returned to an average of 1.4 Bcf/d at the end of the report week after falling to zero on February 23, according to Gulf South Pipeline Company, the operator of the pipeline that delivers feedgas to the terminal. The terminal operated at lower utilization rates for several days last week because of a reported power-related outage. Venture Global LNG announced on March 1 the successful loading and departure of the first LNG cargo produced at the Calcasieu Pass LNG terminal. Weekly natural gas deliveries to the terminal averaged close to 400 MMcf/d this week according to TransCameron, the operator of the pipeline delivering natural gas to Calcasieu Pass.

Prices in the Midwest fall slightly with warmer temperatures. At the Chicago Citygate, the price decreased 30 cents from $4.76/MMBtu last Wednesday to $4.46/MMBtu yesterday. Midwest residential and commercial natural gas consumption decreased by 1.4 Bcf/d (12%), while consumption by the electric power generation sector increased 0.4 Bcf/d (17%) this report week, according to data from PointLogic. Temperatures in the Chicago area averaged 34°F, almost 1°F above normal for the week, and 7°F higher than last report week, leading to 47 fewer HDDs than last week.

Prices fall in the West as temperatures rise. The price at PG&E Citygate in Northern California fell 15 cents, from $5.55/MMBtu last Wednesday to $5.40/MMBtu yesterday. The price at SoCal Citygate in Southern California fell $1.24 from $5.81/MMBtu last Wednesday to $4.57/MMBtu yesterday. NOAA reports temperatures in Riverside, California, inland from Los Angeles, averaged 59°F this report week, 4°F higher than last report week. The price at Malin, Oregon, the northern delivery point into the PG&E service territory, fell $1.23 from $5.45/MMBtu last Wednesday to $4.22/MMBtu yesterday. The price at Sumas on the Canada-Washington border fell $1.34 from $5.45/MMBtu last Wednesday to $4.11/MMBtu yesterday. In Seattle, Washington, temperatures averaged 44°F, almost 5°F higher than last report week.

Prices in the Northeast rise with higher natural gas consumption. At the Algonquin Citygate, which serves Boston-area consumers, the price went up $6.46 from $15.09/MMBtu last Wednesday to $21.55/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased 9 cents from $4.77/MMBtu last Wednesday to $4.86/MMBtu yesterday. Natural gas consumption in the Northeast increased on average by 3.3 Bcf/d (14%) to 27.0 Bcf/d this report week, according to PointLogic. Residential and commercial sector consumption was up 2.9 Bcf/d (23%) to an average of 15.3 Bcf/d, and natural gas consumption in the power sector increased 0.2 Bcf/d (3%) to an average of 8.2 Bcf/d this week. Temperatures in the Boston area were colder than normal, particularly over the weekend, and forecasts are for colder-than-normal temperatures this weekend. In New England, oil-fired electricity generation and coal-fired electricity generation were introduced back into the electricity supply mix, displacing natural gas-fired electricity generation. Oil-fired electricity generation hit its high for the week on Friday at just over 6% of total electricity generation, and on Sunday coal-fired generation was almost 4% of total electricity generation. Natural gas-fired electricity generation averaged 43% of total electricity generation this week compared with an average of 47% last week.

According to Algonquin Gas Transmission, the Exemplar, an LNG carrier capable of regasifying LNG for delivery into the natural gas pipeline system (also known as a floating storage and regasification unit (FSRU)), discharged approximately 321 million cubic feet (MMcf) of LNG at the Northeast Gateway LNG Terminal between February 19 and February 28. The FSRU completed discharging its cargo of approximately 3.0 Bcf of LNG into the New England market and departed the terminal on March 1.

Appalachian Basin production area prices rise in response to Northeast demand. The Tennessee Zone 4 Marcellus spot price increased 6 cents from $4.33/MMBtu last Wednesday to $4.39/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania rose 11 cents from $4.17/MMBtu last Wednesday to $4.28/MMBtu yesterday. Net natural gas flows out of the region were up an average 0.6 Bcf/d (2.0%) this week, according to PointLogic. Flows to the New York and New Jersey area increased by 1.0 Bcf/d (10.0%) to average 10.9 Bcf/d. Natural gas flows to the Midwest and Southern Corridor were lower this week by 0.2 Bcf/d (3.4%) and by 0.3 Bcf/d (5.2%), averaging 6.2 Bcf/d and 5.4 Bcf/d, respectively.

Prices in the Permian production region decrease week over week. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, fell 26 cents this report week, from $4.39/MMBtu last Wednesday to $4.13/MMBtu yesterday. The Waha Hub traded 52 cents below the Henry Hub price yesterday, compared with last Wednesday when it traded 18 cents below the Henry Hub price. Prices in West Texas are lower week over week, but have been increasing since Monday; the price at the Waha Hub reached a low for the week of $3.72/MMBtu on Monday.

U.S. natural gas supply decreases from all sources this week. Average total supply of natural gas fell this report week by 1.0% (1.0 Bcf/d) compared with the previous report week, according to data from PointLogic. Dry natural gas production decreased by 1.0% (0.9 Bcf/d), and average net imports from Canada decreased by 1.9% (0.1 Bcf/d).

U.S. natural gas demand is up in every consuming sector this week. Total U.S. consumption of natural gas rose in all sectors this week, increasing by 4.5% (4.1 Bcf/d) compared with the previous report week, according to data from PointLogic. Natural gas consumption for power generation climbed by 8.8% (2.4 Bcf/d) week over week and in the residential and commercial sectors consumption increased by 4.1% (1.6 Bcf/d). Temperatures across the United States varied regionally. Most of the country had below-average daytime and nighttime temperatures, but some areas in the Southeast experienced daytime and nighttime temperatures that were significantly above average, according to data from NOAA. Industrial sector consumption increased by 0.2% (0.04 Bcf/d) week over week, and natural gas exports to Mexico increased 4.6% (0.3 Bcf/d). Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 12.3 Bcf/d, or 0.4 Bcf/d higher than last week.

U.S. LNG exports increase by six vessels this week from last week. Twenty-four LNG vessels (nine from Sabine Pass, five from Corpus Christi, three each from Cameron and Freeport, two from Cove Point, and one each from Elba Island and Calcasieu Pass) with a combined LNG-carrying capacity of 92 Bcf departed the United States between February 24 and March 2, according to shipping data provided by Bloomberg Finance, L.P.

Storage:

The net withdrawals from storage totaled 139 Bcf for the week ending February 25, compared with the five-year (2017–2021) average net withdrawals of 98 Bcf and last year's net withdrawals of 132 Bcf during the same week. Working natural gas stocks totaled 1,643 Bcf, which is 255 Bcf lower than the five-year average and 216 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 91 Bcf to 149 Bcf, with a median estimate of 138 Bcf.

The average rate of withdrawals from storage is 8% 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 6.8 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,411 Bcf on March 31, which is 255 Bcf lower than the five-year average of 1,666 Bcf for this 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