Natural Gas

Overview:

(For the Week Ending Wednesday, November 20, 2013)

• Natural gas spot prices fell slightly over most of the country, with the exception of prices in the Northeast. The Henry Hub spot price declined from $3.68/MMBtu last Wednesday, November 13, to $3.62/MMBtu yesterday.
• At the New York Mercantile Exchange, however, the December 2013 contract rose from $3.566/MMBtu last Wednesday to $3.674 yesterday.
• Working natural gas in storage decreased to 3,789 Bcf as of Friday, November 15, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). Marking the first storage withdrawal of the 2013-14 heating season, stocks declined by 45 Bcf for the week, resulting in storage levels 2.3% below year-ago levels, but 0.4% above the 5-year average.
• The Baker Hughes natural gas rotary rig count totaled 370 this week, an increase of 5 from the previous week, according to data released November 15 by Baker Hughes Inc. The oil rig count rose by 2 to 1,385 active units. The total rig count is 1,762, up 8 rigs from the previous week and down 47 from a year ago.
• The weekly average natural gas plant liquids composite price rose this week (covering November 11 through November 15) compared to the previous week by 1.6%, and is now at $10.65/MMBtu. Ethane rose by 3.2%, while natural gasoline, propane, and isobutane rose by between 1% and 3%. Butane increased by 0.9%.

more summary data

Prices/Demand/Supply:

For the most part, price movements were moderate. The Henry Hub price fell slightly from $3.68/MMBtu last Wednesday to $3.62 yesterday. Within the week, Henry Hub prices fluctuated between a low of $3.52/MMBtu Thursday to a high of $3.71/MMBtu Monday. Price movements in most of the rest of the country were similar, with most pricing locations posting a slight net decline for the week. Cold temperatures are expected in the coming week; however, continued strong production and storage levels may help to mute potential price increases.

Cold winter temperatures boosted Boston prices substantially. Unlike most of the rest of the country, New England has infrastructure constraints that often lead to sharp price increases in times of high demand. At the Algonquin Citygate, which serves Boston consumers, prices rose to $6.30/MMBtu Tuesday, up more than $1.50/MMBtu from the beginning of the report week. Similarly, on Tennessee Pipeline's Zone 6 Line 200, which serves New England consumers, prices increased from $4.69/MMBtu at the beginning of the report week to $6.30/MMBtu Tuesday, before falling below $5/MMBtu on Wednesday. According to Bentek Energy, total demand in the Northeast increased from 13.1 Bcf/d Monday to 19.3 Bcf/d Tuesday.

Despite increases in the Northeast, overall consumption was down. Total natural gas consumption fell 6%, representing overall week-over-week declines in industrial, residential/commercial, and natural gas used for power generation. Though weekly data show an overall decline, daily data show a strong uptick in consumption at the end of the report week (likely related to colder weather at the end of the week).

Total supply declined 1.1% over the week. Total U.S. dry gas production fell by 0.8% week-over-week but remains 3% greater than the same time last year. Imports from Canada declined 5%, and LNG sendout remained at minimal levels.

Near-month (December 2013) natural gas futures contract price rose. The futures price began the week at $3.566/MMBtu, oscillated between the mid-$3.50s and mid-$3.60s, and ended the week up nearly 11 cents at $3.674/MMBtu. The 12-month strip (the average of the 12 contracts between December 2013 and November 2014) behaved similarly, rising from $3.665/MMBtu last Wednesday to $3.751/MMBtu yesterday.

more price data

Storage

Gas storage sees first net withdrawal this season. The net withdrawal reported this week was 45 Bcf, 9 Bcf larger than last year's withdrawal of 36 Bcf and 43 Bcf larger than the 5-year average withdrawal of 2 Bcf. Current inventories totaling 3,789 Bcf are 89 Bcf (2.3%) less than last year at this time, but 15 Bcf (0.4%) above the 5-year (2008-12) average of 3,774 Bcf.

Net withdrawal is larger than expected. When the EIA storage report was released, there was a slight increase in prices for natural gas futures on the New York Mercantile Exchange. At 10:30 a.m., the price of the near-month (December 2013) contract rose 3 cents to $3.73/MMBtu, and remained near that level in the hour following trading.

All three regions post decreases this week. Only the East region remains below its 5-year average and its year ago levels. Net withdrawals in the East region were 31 Bcf this week, 25 Bcf larger than its 5-year average withdrawal of 6 Bcf, and 12 Bcf larger than its year-ago withdrawal of 19 Bcf. The Producing region and the West region had net withdrawals of 13 Bcf this week and 1 Bcf, respectively.

Cooler weather prompts storage withdrawal. Temperatures in the Lower 48 states averaged 45.7 degrees for the week, 1.9 degrees cooler than the 30-year normal temperature and 2.0 degrees cooler than the same period last year.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook