Natural Gas Weekly Update
Natural Gas Weekly Update
(For the Week Ending Wednesday, August 17, 2016)
Natural gas spot prices were mixed this report week (Wednesday, August 10, to Wednesday, August 17), but overall price changes were small at most locations. The Henry Hub spot price fell from $2.73 per million British thermal units (MMBtu) last Wednesday to $2.71/MMBtu yesterday.
At the New York Mercantile Exchange (Nymex), the September 2016 contract rose nearly 6¢, from $2.561/MMBtu last Wednesday to $2.619/MMBtu yesterday.
Net injections to working gas totaled 22 Bcf for the week ending August 12. Working gas stocks are 3,339 Bcf, which is 11% greater than the year-ago level and 14% greater than the five-year (2011-15) average for this week.
According to Baker Hughes, for the week ending Friday, August 12, the natural gas rig count increased by 2 to 83. The number of oil-directed rigs rose by 15 to 396. The total rig count climbed by 17, and now stands at 481.
The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 6¢, closing at $4.62/MMBtu for the week ending August 12. The prices of natural gasoline and propane rose by 7% and 1%, respectively. The price of ethane fell by 3%, and the price of butane and isobutane remained flat week over week.
Henry Hub prices fall slightly. This report week (Wednesday, August 10, to Wednesday, August 17), the Henry Hub spot price fell 2¢ from $2.73/MMBtu last Wednesday to $2.71/MMBtu yesterday. Price movements at the Henry Hub were subdued this week; the spot price closed at $2.71/MMBtu for the last three trading days. At the Chicago City gate prices decreased 3¢ from $2.69/MMBtu last Wednesday to $2.66/MMBtu yesterday. However, prices at PG&E City gate in California gained 3¢, going from $3.12/MMBtu last Wednesday to $3.15/MMBtu yesterday.
Northeast prices mixed. At the Algonquin City gate, which serves Boston-area consumers, prices fell 91¢ over the report week. After starting the week last Wednesday at $3.75, Algonquin City gate prices increased to $6/MMBtu on Monday, likely the result of a force majeure on Algonquin’s pipeline system because of unplanned maintenance, but by Wednesday had fallen back to $2.84/MMBtu. At the Transcontinental Pipeline’s Zone 6 trading point for New York, prices remained unchanged Wednesday to Wednesday at $2.44/MMBtu. New York did not see the same dramatic increase in prices as Boston did; New York prices reached their weekly peak at $2.80/MMBtu on Monday.
Nymex prices increase. At the Nymex, the price of the September 2016 contract increased nearly 6¢, from $2.561/MMBtu last Wednesday to $2.619/MMBtu yesterday. The price of the 12-month strip averaging September 2016 through August 2017 futures contracts climbed 2¢ to $2.963/MMBtu.
Supply increases. According to data from PointLogic, total supply of natural gas increased by 1% over the report week. Dry production remained constant week over week, and average net imports from Canada increased by 3% from last week.
Power burn drives consumption. During the report week, total U.S. consumption of natural gas rose by 1% according to data from PointLogic. Power burn climbed by 4% week over week and industrial consumption stayed constant, averaging 19.4 Bcf/d. Natural gas exports to Mexico were the same as last week, averaging 3.6 Bcf/d.
LNG exports. The natural gas pipeline flows to Sabine Pass liquefaction terminal averaged 1.2 Bcf/d, 37% higher than flows last week, as commissioning activities for liquefaction Train 2 continue. Sabine Pass LNG has filed a request with the Federal Energy Regulatory Commission (FERC) to add fuel gas by August 19 to begin commissioning activities for liquefaction Train 3. Cheniere Energy Inc., the terminal operator, has delayed the startup of Train 3 by two months, now targeting “substantial completion” by June 2017, instead of a previously estimated date of April 2017. In its monthly progress report filed with FERC, the company cited weather-related and other factors as reasons for the delay. The entire Sabine Pass LNG facility will be shut down for several weeks starting in September for maintenance and to address a design problem. One vessel (LNG-carrying capacity 3.4 Bcf) departed Sabine Pass terminal on August 15 and one vessel (LNG-carrying capacity 3.0 Bcf) is currently loading at the terminal.
Injections to storage continue at slower-than-normal rate. Net injections into storage totaled 22 Bcf, compared with the five-year (2011-15) average net injections of 57 Bcf and last year’s net injections of 56 Bcf during the same week. Working gas stocks total 3,339 Bcf, 405 Bcf above the five-year average and 327 Bcf above last year at this time.( Full Report )
This week marks the 15th consecutive week that the gap of working gas stocks compared with the five-year average declined. When the refill season began on April 1, working gas stocks were 874 Bcf above the five-year average.
Net injections into storage were somewhat bullish compared to market expectations. Estimates of net injections into storage generally ranged from 18 to 30 Bcf, with a median of 26 Bcf. As a result, the price of the Nymex contract for September delivery at the Henry Hub rose 2¢/MMBtu to $2.66/MMBtu, in 1,361 trades at the release of the Weekly Natural Gas Storage Report. Prices continued to rise to $2.67/MMBtu, before declining somewhat in subsequent trading.
Spread to the January futures price decreases on the week. During the most recent storage week, the average natural gas spot price at the Henry Hub was $2.77/MMBtu, while the Nymex futures price of natural gas for delivery in January 2017 averaged $3.25/MMBtu, a difference of 49¢/MMBtu. A year ago, the premium was 38¢/MMBtu. The average Henry Hub price so far in the injection season this year, from April 1 to August 11, is $2.34/MMBtu, 15% lower than the average value of $2.76/MMBtu for the same period last year. Earlier during this year’s refill season, the premium exceeded $1/MMBtu.
Temperatures fall from week-ago levels, but remain higher than normal. Temperatures in the Lower 48 states averaged 77°F, 2°F more than the normal and 2°F more than last year at this time. Last week, temperatures reached 78°F on average in the Lower 48 states. Cooling degree-days (CDD) in the Lower 48 states totaled 87, compared with 71 last year and a normal of 72.
Photo source - EIA
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