Natural Gas

Overview:

(For the week ending Wednesday, May 11, 2022)

• Spot prices: Natural gas spot prices fell at most locations this report week (Wednesday, May 4, to Wednesday, May 11). The Henry Hub spot price fell from $8.30 per million British thermal units (MMBtu) last Wednesday to $7.51/MMBtu yesterday.
• International spot prices: International natural gas spot prices decreased this report week. Bloomberg Finance, L.P., reports that the swap prices for liquefied natural gas (LNG) cargoes in East Asia fell 31 cents/MMBtu to a weekly average of $23.62/MMBtu. At the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas spot market in Europe, the day-ahead price decreased $2.83/MMBtu to a weekly average of $28.01/MMBtu. The price at TTF averaged above the East Asia price for the fourth week in a row. Historically, natural gas prices in East Asia average above natural gas prices in Europe. In the same week last year (week ending May 12, 2021), the prices in East Asia and at the TTF were $9.11/MMBtu and $8.99/MMBtu, respectively.
• Futures: The price of the June 2022 NYMEX contract decreased 77.5 cents, from $8.415/MMBtu last Wednesday to $7.640/MMBtu yesterday. The price of the 12-month strip averaging June 2022 through May 2023 futures contracts declined 65.9 cents to $7.097/MMBtu.
• Storage: The net injections to working gas totaled 76 billion cubic feet (Bcf) for the week ending May 6. Working natural gas stocks totaled 1,643 Bcf, which is 19% lower than the year-ago level and 16% lower than the five-year (2017–2021) average for this week.
• NGPLs: The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 20 cents/MMBtu, averaging $12.59/MMBtu for the week ending May 11. Weekly average ethane prices rose 2%, following the 4% increase in natural gas prices at the Houston Ship Channel. The ethane premium to natural gas narrowed by 10%. The price of ethylene rose 4%, resulting in a wider ethane to ethylene spread, which rose 10%. Brent crude oil prices rose 1%, while prices of heavier natural gas liquids fell. Natural gasoline prices fell 2%, normal butane and isobutane prices fell 5% and 3%, respectively, and propane prices fell 2%. The propane discount to crude oil widened by 11%.
• Rigs: According to Baker Hughes, for the week ending Tuesday, May 3, the natural gas rig count increased by 2 rigs week over week to 146 rigs. The Marcellus added two rigs, the Haynesville added one rig, and one rig was dropped in an unspecified producing region. The number of oil-directed rigs increased by 5 rigs to 557 rigs. The Mississippian and Granite Wash each added one rig, four rigs were added in unspecified producing regions, and one rig was dropped in the Cana Woodford. The total rig count now stands at 705 rigs, the highest level since March 27, 2020, and 257 rigs more than the same week last year.

more summary data

Prices/Supply/Demand:

Prices along the Gulf Coast fall, even as temperatures and demand for air conditioning rise. This report week (Wednesday, May 4, to Wednesday, May 11), the Henry Hub spot price fell 79 cents from $8.30/MMBtu last Wednesday to $7.51/MMBtu yesterday. Prices across the South also fell in line with the Henry Hub, even as temperatures across much of the region remained above normal this report week, resulting in higher air-conditioning demand. Natural gas consumption by the electric power sector along the Gulf Coast increased by 0.6 billion cubic feet per day (Bcf/d) (15%), according to data from PointLogic. In the Houston Area, temperatures averaged 81°F this report week, 6°F higher than normal. Over the weekend, temperatures in the Houston Area reached a high of 93°F. Natural gas production in North Louisiana increased by 0.3 Bcf/d (4%) this report week. Feed gas deliveries to liquefied natural gas (LNG) export terminals along the Gulf Coast increased by 0.1 Bcf/d (1%) to 11.0 Bcf/d. Deliveries to terminals in South Texas increased by 0.3 Bcf/d (7%), while deliveries to terminals in South Louisiana decreased by 0.2 Bcf/d (2%). Following completion of three weeks of maintenance on Train 1 at Freeport LNG in Texas, natural gas deliveries to the terminal increased, averaging 1.9 Bcf/d this week. Train 1 at Cameron LNG in Louisiana, which has been undergoing scheduled maintenance since the end of April, is expected to return to operation in mid-May.

Prices in the Midwest fall as temperatures rise. At the Chicago Citygate, the price decreased 76 cents from $8.22/MMBtu last Wednesday to $7.46/MMBtu yesterday. Temperatures in the Chicago Area averaged 62°F this report week, 4°F higher than normal. At the beginning of the week, temperatures averaged 48°F, which is 9°F lower than normal. After steadily rising throughout the week, temperatures averaged 82°F on Wednesday, which is 23°F higher than normal. Week over week, natural gas consumption by the residential and commercial sectors in the Midwest decreased by 1.5 Bcf/d (32%). Natural gas production in North Dakota increased by 0.4 Bcf/d (30%), as production continues to be restored following disruptions caused by an unseasonable winter storm late last month.

Prices across the West fall in line with the national average. The price at PG&E Citygate in Northern California fell 45 cents, down from $9.49/MMBtu last Wednesday to $9.04/MMBtu yesterday. The price at Malin, Oregon, the northern delivery point into the PG&E service territory, fell 97 cents from $8.23/MMBtu last Wednesday to $7.26/MMBtu yesterday. The price at Sumas on the U.S.-Canada border in Washington State, the main pricing point for the Pacific Northwest, fell 71 cents from $7.93/MMBtu last Wednesday to $7.22/MMBtu yesterday. Temperatures in the Seattle City Area averaged 51°F this report week, 4°F lower than normal. In the Pacific Northwest more broadly, temperatures were lower than normal this week, leading to a 0.1 Bcf/d (19%) increase in natural gas consumption by the residential and commercial sectors, according to data from PointLogic.

The price at SoCal Citygate in Southern California decreased 94 cents from $8.64/MMBtu last Wednesday to $7.70/MMBtu yesterday. At the beginning of the week, temperatures in the Riverside Area averaged 72°F (6°F higher than normal) and then dropped throughout the week, averaging 59°F on Wednesday (8°F lower than normal).

Prices in the Northeast decline this week as a result of less heating demand. At the Algonquin Citygate, which serves Boston-area consumers, the price went down $1.01 from $8.47/MMBtu last Wednesday to $7.46/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price decreased 94 cents from $7.65/MMBtu last Wednesday to $6.71/MMBtu yesterday. Warmer temperatures contributed to consumption in the residential and commercial sectors in the Northeast decreasing by 0.9 Bcf/d (14%) this week, according to data from PointLogic. In the New York Central Park Area, temperatures averaged 58°F this week, 3°F higher than last week, resulting in a decline of 0.5 Bcf/d (18%) in consumption of natural gas in the residential and commercial sectors in the New York and New Jersey area, according to data from PointLogic.

Appalachian Basin prices decline with lower natural gas consumption. The Tennessee Zone 4 Marcellus spot price decreased 99 cents from $7.50/MMBtu last Wednesday to $6.51/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania fell 82 cents from $7.52/MMBtu last Wednesday to $6.70/MMBtu yesterday. Total consumption of natural gas declined in the Appalachia region according to data from PointLogic, led by the residential and commercial sectors where consumption of natural gas declined by 0.3 Bcf/d (15%).

Prices in the Permian production region decrease, following the Henry Hub spot price. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, fell 82 cents this report week, from $7.78/MMBtu last Wednesday to $6.96/MMBtu yesterday. The Waha Hub traded 55 cents below the Henry Hub price yesterday, maintaining about the same difference as last Wednesday when it traded 52 cents below the Henry Hub price.

U.S. natural gas supply increases week over week. According to data from PointLogic, the average total supply of natural gas rose by 0.3% (0.3 Bcf/d) compared with the prior report week, as production from the Bakken, Haynesville, and Marcellus increased. Dry natural gas production grew by 1.0% (1.0 Bcf/d) compared with the previous report week, and average net imports from Canada decreased by 10.9% (0.7 Bcf/d).

U.S. natural gas demand falls as temperatures in many major metropolitan areas moderate. Total U.S. consumption of natural gas fell by 3.2% (2.2 Bcf/d) compared with the previous report week, as colder-than-normal temperatures across the Midwest and Northeast moderated. Natural gas consumption by the residential and commercial sectors declined by 15.8% (2.7 Bcf/d), according to data from PointLogic. Across much of the South, particularly across Texas, Louisiana, and into the Midcontinent, temperatures were higher than normal. Natural gas consumption by the electric power generation sector climbed by 3.3% (0.9 Bcf/d). Industrial sector consumption decreased by 1.8% (0.4 Bcf/d), and natural gas exports to Mexico increased 3.3% (0.2 Bcf/d), following last week’s decline. Natural gas deliveries to U.S. liquefied natural gas (LNG) export facilities (LNG pipeline receipts) averaged 12.2 Bcf/d, 0.1 Bcf/d higher than last week.

U.S. LNG exports decrease by four vessels this week from last week. Twenty-one LNG vessels (eight from Sabine Pass, five from Freeport, four from Corpus Christi, three from Cameron, and one from Cove Point) with a combined LNG-carrying capacity of 76 Bcf departed the United States between May 5 and May 11, according to shipping data provided by Bloomberg Finance, L.P. Lower LNG exports this week can be attributed to seasonal maintenance at LNG terminals, including Freeport LNG and Cameron LNG (see Gulf Coast section above).

Storage:

The net injections into storage totaled 76 Bcf for the week ending May 6, compared with the five-year (2017–2021) average net injections of 82 Bcf and last year's net injections of 70 Bcf during the same week. Working natural gas stocks totaled 1,643 Bcf, which is 312 Bcf lower than the five-year average and 376 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 64 Bcf to 86 Bcf, with a median estimate of 80 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