Natural Gas

Overview:

(For the Week Ending Wednesday, July 11, 2018)

• Natural gas spot price movements followed temperatures at most locations this report week (Wednesday, July 4 to Wednesday, July 11). The Henry Hub spot price fell from $2.87 per million British thermal units (MMBtu) last Wednesday to $2.84/MMBtu yesterday. The average price for the week decreased 6¢, from $2.91/MMBtu last report week to $2.85/MMBtu this report week.
• At the New York Mercantile Exchange (Nymex), the August 2018 contact price decreased to $2.82/MMBtu, down 1¢ from last Thursday (Wednesday, July 4 was a holiday).
• Net injections into working gas totaled 51 billion cubic feet (Bcf) for the week ending July 6. Working natural gas stocks are 2,203 Bcf, which is 25% lower than the year-ago level and 19% lower than the five-year (2013–17) average for this week.
• The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 30¢, averaging $9.15/MMBtu for the week ending July 11. The price of isobutane fell by 5%. The price of ethane, propane, and butane rose by 8%, 5%, and 7%, respectively. The price of natural gasoline remained flat week over week.
• According to Baker Hughes, for the week ending Tuesday, July 3, the natural gas rig count remained flat at 187. The number of oil-directed rigs rose by 5 to 863. The total rig count increased by 5, and it now stands at 1,052.

more summary data

Prices/Supply/Demand:

National benchmark spot price decreases with cooler temperatures over the eastern United States. This report week (Wednesday, July 4 to Wednesday, July 11), the Henry Hub spot price fell 3¢ from $2.87/MMBtu last Wednesday to $2.84/MMBtu yesterday while the average price for the week decreased 6¢, from $2.91/MMBtu last report week to $2.85/MMBtu this report week. After record-high temperatures were experienced in the Northeast and Midwest last report week, temperatures in most of the Lower 48 states decreased by as much as 15°F degrees Fahrenheit (°F), reducing natural gas demand for electric power generation for air conditioning.

Key Midwest trading hub price decreases. At the Chicago Citygate, prices decreased 1¢ from $2.76/MMBtu last Wednesday to $2.75/MMBtu yesterday. The average price for the week decreased 12¢, from $2.80/MMBtu last report week to $2.68/MMBtu this report week.

California prices increase. The price at SoCal Citygate increased $1.16 from $3.44/MMBtu last Wednesday to $4.60/MMBtu yesterday. Prices on July 5 reached $8.28/MMBtu in anticipation of record-high temperatures in Southern California. The California Border Average price increased $1.00 from $2.54/MMBtu last Wednesday to $3.54/MMBtu yesterday.

Northeast prices decrease with cooler temperatures. At the Algonquin Citygate, which serves Boston-area consumers, prices went down 48¢ from $3.18/MMBtu last Wednesday to $2.70/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 14¢ from $3.06/MMBtu last Wednesday to $2.92/MMBtu yesterday. Temperatures in the Northeast were lower this report week following unseasonably high temperatures the previous report week, which reduced the need for air conditioning. According to the S&P Global Platts Northeast Observer, average power demand for the report week decreased 14% from last report week.

Appalachian prices decrease. Tennessee Zone 4 Marcellus spot prices decreased 8¢ from $2.17/MMBtu last Wednesday to $2.09/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania fell 17¢ from $2.34/MMBtu last Wednesday to $2.17/MMBtu yesterday.

Nymex futures decrease. At the Nymex, the August 2018 contract price decreased 1¢ from $2.84/MMBtu last Thursday, July 5, (July 4 was a holiday) to $2.83/MMBtu yesterday. The price of the 12-month strip averaging August 2018 through July 2019 futures contracts remained unchanged.

Overall supply decreases. According to data from PointLogic Energy, the average total supply of natural gas fell by 1% compared with the previous report week. Dry natural gas production remained constant week over week while average net imports from Canada decreased by 5% from last week.

Overall demand decreases. Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation declined by 4% week over week, led by a 15% decrease in the Northeast. A 26% increase in power burn in the Western region was not enough to offset this decrease. Industrial sector consumption increased by 1% week over week. In the residential and commercial sectors, consumption increased by 9%. Natural gas exports to Mexico increased 3%.

U.S. LNG exports increase week over week. Six LNG vessels (combined LNG-carrying capacity 22.4 Bcf) departed the United States from July 5 through July 11 (four from the Sabine Pass liquefaction terminal and two from the Cove Point terminal).

Cheniere Energy, the developer of the Sabine Pass and Corpus Christi liquefaction terminals, received permission from the Federal Energy Regulatory Commission last week to start commissioning a fuel gas system at Corpus Christi Train 1 and introduce hot oil as part of the commissioning activities. Corpus Christi has two trains currently under construction (baseload capacity of each train is 0.6 Bcf/d). The third stage of the Corpus Christi expansion will consist of seven modular liquefaction trains and a storage tank. The third expansion stage received a Final Investment Decision in May, but it is not yet under construction. The first export cargo from Corpus Christi Train 1 is expected in October–November of this year, according to Bloomberg.

A full list of U.S. liquefaction facilities is available in EIA’s new database of liquefaction facilities.

Storage:

Working gas deficit to the five-year average grows. Net injections into storage totaled 51 Bcf for the week ending July 6, compared with the five-year (2013–17) average net injections of 77 Bcf and last year's net injections of 59 Bcf during the same week. Warmer-than-normal temperatures throughout the Lower 48 states contributed to increased power demand for natural gas for air conditioning, which reduced net injections into working gas. Working gas stocks totaled 2,203 Bcf, which is 519 Bcf lower than the five-year average and 725 Bcf lower than last year at this time.

Working gas stocks are on pace to end the refill season below the lower bound of the five-year range. Net injections into storage are 17% lower than the five-year average rate so far in the 2018 refill season. If working gas stocks match the five-year average rate of injections for the remainder of the refill season, inventories will total 3,296 Bcf on October 31, compared with the five-year low of 3,560 Bcf for that time of year. Working gas stocks are currently 150 Bcf higher than the bottom of the five-year range, but working gas stocks are 10 Bcf and 24 Bcf lower than the five-year range in the East and Midwest regions, respectively. The South Central region posted working gas stocks 161 Bcf higher than the bottom of the five-year range.

Despite relatively low storage inventories, the average January 2019 futures contract price trades at a lower premium to the average spot price than last year at this time. During the most recent storage week, the average natural gas spot price at the Henry Hub averaged $2.88/MMBtu, and the Nymex futures price of natural gas for delivery in January 2019 averaged $3.09/MMBtu, 22¢/MMBtu higher than the spot price. A year ago, the January contract was 35¢/MMBtu higher than the spot price.

Reported net injections into storage are lower than the median of the range of analysts’ expections. According to The Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas storage ranged from net injections of 42 Bcf to 63 Bcf, with a median estimate of 54 Bcf. At the 10:30 a.m. release of the Weekly Natural Gas Storage Report (WNGSR), the price of the Nymex futures contract for August delivery at the Henry Hub remained close to the pre-release level of $2.82/MMBtu with 101 trades executed. Trading activity increased somewhat in subsequent trading, but prices remained close to $2.82/MMBtu.

Temperatures are in the higher-than-normal range for the storage week. Temperatures in the Lower 48 states averaged 79 °F, 5°F higher than normal and 3°F higher than last year at this time. Temperatures were also 4°F higher than the level reported for the previous week.

more storage data

See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook