Natural Gas

Overview:

(For the Week Ending Wednesday, November 13, 2013)

• Natural gas prices rose across most of the country over the report week (Wednesday to Wednesday). The Henry Hub spot price closed yesterday at $3.68/MMBtu, up 23 cents from $3.45/MMBtu at the beginning of the report week.
• At the New York Mercantile Exchange (Nymex), the December contract settled at $3.566/MMBtu yesterday, up 6.8 cents/MMBtu for the report period.
• Working natural gas in storage increased to 3,834 Bcf as of Friday, November 8, according to the U.S. Energy Information Administration's (EIA)
• Weekly Natural Gas Storage Report
(WNGSR). A net storage injection of 20 Bcf for the week resulted in storage levels 2.0% below year-ago levels but 1.5% above the 5-year average.
• The Baker Hughes natural gas rotary rig count totaled 365 active units as of Friday, November 8, an increase of 5 rigs from the previous week. The oil rig count increased by 7 units over last week to 1,383. The total rig count is 1,754, up 12 rigs for the week and down 52 from a year ago.
• The weekly average natural gas plant liquids composite price fell this week (covering November 4 through November 8) compared to the previous week by 1.5%, and is now at $10.48/MMBtu. Ethane fell by 5.3%, while natural gasoline, butane, and isobutane fell between 1% and 3%. Propane increased by 0.7%.

more summary data

Prices/Demand/Supply:

Natural gas hub prices rose throughout the country. Prices at most locations increased by between 10 and 30 cents/MMBtu from Wednesday-to-Wednesday. The price increase was stronger in the Northeast, with the onset of cooler than normal weather at the end of the report week. The spot price at the Algonquin Citygate, which serves the Boston area, rose by $4.41/MMBtu in trading on Monday, and closed Tuesday $5.15 above last Wednesday's closing price. However, prices at Algonquin fell in trading this Wednesday to close the report week at $4.78/MMBtu, up $1.15 from last Wednesday. The spot price at Transco Zone 6 New York, delivering to New York City, closed trading Tuesday up 81cents/MMBtu, more in line with the average for other nearby pricing points. It also fell in trading this Wednesday to close the report week at $3.77/MMBtu, up 48 cents from the beginning of the report week. In previous years, price changes in reaction to changes in weather and increased demand, at both Transco Zone 6 New York and at the Algonquin Citygate, have been larger than the average for other Northeast pricing points. However, consumers served by the Transco Zone 6 New York trading hub have recently benefitted from a number of pipeline expansions that began service in the region on Friday, November 1, as discussed in this week's "In the News" section of this report.

Prices at the Henry Hub increased after three weeks of declines. The Henry Hub spot price, which started the report week at $3.45/MMBtu, averaged 9-cent gains in trading every day this report week except for Friday and Wednesday, when it posted 3-cent and 1-cent losses, respectively. The Henry Hub price ended the report week at $3.68/MMBtu, up 23 cents from the previous Wednesday. Similarly, at the Nymex, the December natural gas contract increased 6.8 cents/MMBtu from $3.498/MMBtu last Wednesday to $3.566/MMBtu yesterday. The 12-month strip (average of December 2013 to November 2014 contracts) gained 4.5 cents/MMBtu for the week, closing at $3.665/MMBtu.

Residential/commercial sector demand increased. Total consumption increased by 15.6% from the previous week, largely because of a 31.5% increase in residential and commercial consumption, according to data from Bentek Energy. Space heating demand increased as temperatures fell across much of the country and significantly colder-than-normal temperatures moved into the Northeast on Tuesday. Consumption of natural gas for power generation and in the industrial sector were also up this week, by 6.1% and 4.7% respectively.

Natural gas supply increased as production and imports rose. Total supply increased by 1.6% from the previous week. Dry gas production increased by 0.7%, with production reaching an all time high of 67.5 Bcf on November 9, according to Bentek data. Net imports of natural gas from Canada increased by 14.1% as net imports into the Northeast were almost double the previous week. Imports of LNG increased over the report week, notably at the Everett terminal in Massachusetts, but continue to be a small contributor to total U.S. natural gas supply.

more price data

Storage

Working natural gas in storage rose to 3,834 Bcf as of November 8. This week's net injection was 20 Bcf compared with last year's withdrawal of 12 Bcf, and slightly larger than the 5-year average increase of 19 Bcf. Current inventories are 80 Bcf (2.0%) less than last year at this time, but 58 Bcf (1.5%) above the 5-year (2008-12) average of 3,776 Bcf.

The net injection was in line with the market expectation of a 20-Bcf build. The increase in prices on the Nymex upon release of the storage numbers was moderate. At 10:30 a.m., the price of the near month (December 2013) contract rose 4 cents to $3.54/MMBtu, and fell back down minutes later to $3.51.

Two of the three regions posted larger-than-average builds. Net injections in the East region were 10 Bcf this week, 5 Bcf larger than its
5-year average injection of 5 Bcf, and stocks remain 4.5% below the
5-year average for that region. Inventories in the Producing region grew by 12 Bcf this week, 1 Bcf larger than its 5-year average injection of 11 Bcf, and stocks in that region are 9.5% over its 5-year average levels. The West region had a net withdrawal of 2 Bcf, compared with its 5-year injection of 3 Bcf.

Near normal temperatures supported this week's close-to-average net injection. Temperatures in the Lower 48 states averaged 51.0 degrees for the week, 1.1 degrees warmer than the 30-year normal temperature and 2.1 degrees warmer than the same period last year.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook