Natural Gas

Overview:

(For the week ending Wednesday, March 9, 2022)

• Spot Prices: Natural gas spot price movements were mixed this report week (Wednesday, March 2 to Wednesday, March 9). The Henry Hub spot price fell from $4.65 per million British thermal units (MMBtu) last Wednesday to $4.56/MMBtu yesterday. Prices at major hubs settled within a narrow band of $1.06/MMBtu this week. They ranged from a high of $5.31/MMBtu at PG&E Citygate in California to a low of $4.25/MMBtu in New York, according to data from Natural Gas Intelligence.
• International Spot Prices: International natural gas spot prices rose again this week amid Russia’s further invasion of Ukraine and increased uncertainty in European natural gas markets. Bloomberg Finance, L.P. reports that swap prices for liquefied natural gas (LNG) cargos in East Asia for the balance of March rose $12.65/MMBtu to a weekly average of $40.41/MMBtu. At the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas spot market in Europe, the day-ahead prices rose $18.71 to a weekly average of $59.76/MMBtu. In the same week last year (week ending March 10, 2021), prices in East Asia and at TTF were $5.99/MMBtu and $5.93/MMBtu, respectively.
• Futures: The price of the April 2022 NYMEX contract decreased 23.6 cents, from $4.762/MMBtu last Wednesday to $4.526/MMBtu yesterday. The price of the 12-month strip averaging April 2022 through March 2023 futures contracts declined 19.5 cents to $4.696/MMBtu.
• Storage: The net withdrawals from working gas totaled 124 billion cubic feet (Bcf) for the week ending March 4. Working natural gas stocks totaled 1,519 Bcf, which is 16% 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, rose by $1.25/MMBtu, averaging $13.67/MMBtu for the week ending March 9. Brent crude oil prices rose 17%, pulling up the prices of natural gasoline, isobutane, normal butane, and propane. The natural gasoline price rose 16%, and the prices of isobutane and normal butane rose 14% and 13%, respectively. The propane price rose 10%, widening the propane discount to crude oil by $1.59/MMBtu (63%) to $4.12/MMBtu. The ethane price rose 2%, following a 4% increase in natural gas prices at the Houston Ship Channel. The ethane premium to natural gas narrowed by 3%, while the price of ethylene decreased by 2% this week.
• Rigs: According to Baker Hughes, for the week ending Tuesday, March 1, the natural gas rig count increased by 3 to 130 rigs. Like last week, all 3 rigs were added in the Haynesville, where 14 rigs have been added since the start of 2022. The number of oil-directed rigs decreased by 3 to 519 rigs. The Permian Basin added one rig, and the following regions each lost one rig: the Ardmore Woodford, the Arkoma Woodford, the Haynesville, and an unidentified region. The total rig count this week was flat at 650, the highest level since April 3, 2020, and 247 more rigs than last year at this time.

more summary data

Prices/Supply/Demand:

Prices on the Gulf Coast fall slightly with warmer temperatures. This report week (Wednesday, March 2 to Wednesday, March 9), the Henry Hub spot price fell 9 cents from $4.65/MMBtu last Wednesday to $4.56/MMBtu yesterday. Natural gas consumption by the residential and commercial sectors in South Texas decreased by 0.5 billion cubic feet per day (Bcf/d) (47%) and consumption by the electric power generation sector decreased by 0.7 Bcf/d (19%) this report week, according to data from PointLogic. Across the Southeast region, residential and commercial consumption decreased by over 1 Bcf/d (35%). Temperatures along the Gulf Coast of Texas were warmer than normal this report week. In Houston, Texas, the average temperature was 62°F, almost 14°F higher than last week. Feedgas deliveries to liquefied natural gas (LNG) export terminals in South Texas decreased 0.2 Bcf/d (4%) to 4.2 Bcf/d, and feedgas deliveries to LNG terminals in South Louisiana increased by 0.6 Bcf/d (9%) to 7.4 Bcf/d, according to data from PointLogic. Venture Global LNG loaded and shipped its second LNG cargo produced at the Calcasieu Pass LNG terminal this week. Weekly natural gas deliveries to the terminal averaged slightly more than 0.5 Bcf/d this week according to TransCameron, the operator of the pipeline delivering natural gas to Calcasieu Pass.

Prices in the Midwest are unchanged as temperatures remain warmer than normal. At the Chicago Citygate, the price increased 1 cent from $4.46/MMBtu last Wednesday to $4.47/MMBtu yesterday. Total demand declined in the Midwest, where residential and commercial natural gas consumption decreased by 1.4 Bcf/d (13%), consumption in the electric power generation sector decreased 0.8 Bcf/d (26%), and flows to Canada increased 0.3 Bcf/d to 1.5 Bcf/d this report week, according to data from PointLogic. Temperatures in the Chicago area averaged 38°F, almost 3°F above normal for the week, leading to 20 fewer heating degree days (HDDs).

Prices in the West are mixed as temperatures cool. The price at PG&E Citygate in Northern California fell 9 cents, down from $5.40/MMBtu last Wednesday to $5.31/MMBtu yesterday. The price at Malin, Oregon, the northern delivery point into the PG&E service territory, rose 13 cents from $4.22/MMBtu last Wednesday to $4.35/MMBtu yesterday. The price at Sumas on the Canada-Washington border rose 4 cents from $4.11/MMBtu last Wednesday to $4.15/MMBtu yesterday. In Seattle, Washington, temperatures averaged 43°F, which is 2°F lower than normal. The price at SoCal Citygate in Southern California increased 17 cents from $4.57/MMBtu last Wednesday to $4.74/MMBtu yesterday. NOAA reports temperatures in Riverside, California, inland from Los Angeles, averaged 55°F this report week, 3°F lower than normal. On March 10, El Paso Natural Gas Company (EPNG) issued a notice of an initial force majeure on Line 1110, downstream of the Pecos River Compressor Station, near Carlsbad, New Mexico, leading to the loss of 0.3 Bcf/d of natural gas flows westward to Southern California.

Northeast prices decline with warmer-than-normal temperatures and lower natural gas demand. At the Algonquin Citygate, which serves Boston-area consumers, the price went down $16.94 from $21.55/MMBtu last Wednesday to $4.61/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price decreased 61 cents from $4.86/MMBtu last Wednesday to $4.25/MMBtu yesterday. Temperatures in the Boston area were warmer than normal most of this week, averaging 25 HDDs compared with the average of 29 HDDs for this time of year. Total natural gas consumption in New England fell by 0.7 Bcf/d (19%) to 3.1 Bcf/d from last report week, led by a decrease in consumption in the residential and commercial sectors of 0.6 Bcf/d (26%) to 1.8 Bcf/d, according to data from PointLogic. In the Northeast overall, the trend was the same; total natural gas consumption declined 4.9 Bcf/d (18%) to 22.1 Bcf/d, led by a 25% decline in residential and commercial sector natural gas consumption to 11.4 Bcf/d. Oil- and coal-fired electricity generation fell to zero by the end of the report week as natural gas-fired electricity increased to average 47% of total electricity generation, where it was two weeks ago.

Prices in the Appalachia production region decline along with other areas of the country in response to warming temperatures and decreasing demand. The Tennessee Zone 4 Marcellus spot price fell 33 cents from $4.39/MMBtu last Wednesday to $4.06/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania decreased 20 cents from $4.28/MMBtu last Wednesday to $4.08/MMBtu yesterday. Temperatures in the Pittsburgh area averaged 42°F during the week, 6°F above normal. Production in Appalachia increased by 0.4 Bcf/d (1%) from a week ago to an average of 33.6 Bcf/d, according to data from PointLogic. Total demand decreased by 2.3 Bcf/d (6%) to an average of 38.4 Bcf/d. Southbound natural gas flows increased 1.4 Bcf/d (26%) from a week ago but were offset by a decrease in flows to other areas out of the region and a decline of 2.1 Bcf/d (19%) in total consumption.

Prices in the Permian production region increase, narrowing the discount to Henry Hub. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, rose 12 cents this report week, from $4.13/MMBtu last Wednesday to $4.25/MMBtu yesterday. The Waha Hub traded 31 cents below the Henry Hub price yesterday, compared with last Wednesday when it traded 52 cents below the Henry Hub price. Production in the Permian Basin was relatively unchanged from a week ago, increasing 0.1 Bcf/d to an average of 15.0 Bcf/d, according to PointLogic. Net natural gas flows out of the region increased 0.3 Bcf/d (2%) to average 13.8 Bcf/d for the week. Eastbound flows rose 0.4 Bcf/d (5%) to an average 8.8 Bcf/d and were offset by decreased flows to the south and north.

U.S. average supply of natural gas is unchanged compared with last week. The average total supply of natural gas remained the same as in the previous report week, averaging 99.5 Bcf/d, according to data from PointLogic. Dry natural gas production grew by 0.9% (0.9 Bcf/d) compared with the previous report week, which was offset by a decrease in average net imports from Canada of 15.3% (0.9 Bcf/d) from last week.

U.S. average natural gas consumption is down across most demand sectors this week. Total average U.S. consumption of natural gas fell by 13.3% (12.6 Bcf/d) compared with the previous report week, according to data from PointLogic. Consumption in the residential and commercial sectors declined by 20.8% (8.4 Bcf/d) as above-average temperatures stretched from the Mississippi Valley across the eastern United States, according to NOAA. Natural gas consumed for power generation declined by 10.9% (3.3 Bcf/d) and industrial sector consumption decreased by 3.8% (1.0 Bcf/d) week over week. Natural gas exports to Mexico decreased 3.3% (0.2 Bcf/d), while natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 12.8 Bcf/d, or 0.5 Bcf/d higher than last week.

U.S. LNG exports decrease by one vessel this week from last week. Twenty-three LNG vessels (eight from Sabine Pass, five from Freeport, four from Cameron, three from Corpus Christi, two from Cove Point, and one from Calcasieu Pass) with a combined LNG-carrying capacity of 85 Bcf departed the United States between March 3 and March 9, according to shipping data provided by Bloomberg Finance, L.P.

Storage:

The net withdrawals from storage totaled 124 Bcf for the week ending March 4, compared with the five-year (2017–2021) average net withdrawals of 89 Bcf and last year's net withdrawals of 59 Bcf during the same week. Working natural gas stocks totaled 1,519 Bcf, which is 290 Bcf lower than the five-year average and 281 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 103 Bcf to 131 Bcf, with a median estimate of 121 Bcf.

The average rate of withdrawals from storage is 10% 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 5.3 Bcf/d for the remainder of the withdrawal season, the total inventory would be 1,376 Bcf on March 31, which is 290 Bcf lower than the five-year average of 1,666 Bcf for that 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