Natural Gas

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Natural Gas Weekly Update

for week ending January 13, 2016   |  Release date:  January 14, 2016   |  Next release:  January 21, 2016   |   Previous weeks

JUMP TO: In The News | Overview | Prices/Supply/Demand | Storage

In the News:

EIA forecasts that the United States will be a net exporter of natural gas in mid 2017

Driven by new liquefied natural gas (LNG) export capacity, the United States is forecast to be a net exporter of natural gas by mid-2017, according to EIA's January Short-Term Energy Outlook. Forecasts for continuing declines of U.S. pipeline imports from Canada and increasing U.S. pipeline exports to Mexico also contribute to the United States becoming a net exporter.

This will be the first time since 1955 that the United States is exporting more natural gas than it imports, according to EIA data. The development of the U.S. shale gas resource has supported an increase in U.S. natural gas production, leading to a decline in U.S. imports of natural gas. In the first 10 months of 2015, domestic natural gas production was 35% higher than the same months in 2008. Over that same time period, imports of natural gas into the United States declined by 31%, while U.S. exports of natural gas, largely to Mexico, have increased 90%.

EIA's forecast includes the beginning of operations at the Sabine Pass LNG export facility in Louisiana, with exports of domestically produced natural gas expected to start in the first quarter of 2016, and expand through 2017 as more of the facility's liquefaction capacity enters service. Additionally, with the expansion of infrastructure at the U.S./Mexico border, as well as within Mexico, U.S. exports to Mexico reached record levels in 2015, and the growth in U.S. exports to Mexico is forecast to continue.

Monthly net natural gas imports into the U.S. peaked in August 2007, when they averaged 11.8 billion cubic feet per day (Bcf/d). In September 2015, net imports into the United States averaged 1.5 Bcf/d, its lowest level since 1986 and the fifth lowest level in EIA's data history.

Overview:

(For the Week Ending Wednesday, January 13, 2016)

  • Outside of the Northeast, natural gas spot prices fell at most trading locations during the report week (Wednesday, January 6, to Wednesday, January 13). The Henry Hub spot price fell from $2.35 per million British thermal unit (MMBtu) last Wednesday to $2.30/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the near-month (February 2016) contract rose by less than a penny, from $2.267/MMBtu last Wednesday to $2.269/MMBtu yesterday.
  • Working natural gas in storage decreased by 168 Billion cubic feet (Bcf), declining to 3,475 Bcf as of Friday, January 8. The net withdrawal from storage resulted in storage levels 20% above a year ago and 16% above the five-year (2011–15) average for this week.
  • The total oil and natural gas rig count declined by 34 units this week, with 664 units in service for the week ending Friday, January 8, according to data from Baker Hughes Incorporated. The oil rig count decreased by 20 units to 516, and the natural gas rig count fell by 14 units to 148. The oil and natural gas rig count has not been this low since August 1999.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 0.7% to $4.18/MMBtu for the week ending Friday, January 8. The prices of ethane and butane increased by 3.6% and 0.5%, respectively. The natural gasoline price fell by 5.0%, isobutane fell by 0.4%, and the propane price fell by 0.2%.

more summary data

Prices/Demand/Supply:

Prices fall slightly at most points outside of the Northeast. The Henry Hub spot price fell from $2.35/MMBtu last Wednesday to $2.30/MMBtu yesterday. Midweek, however, the Henry Hub price rose to higher levels, settling at $2.53/MMBtu on Monday, likely because of colder temperatures in much of the United States. Price patterns were similar at other major trading hubs. The natural gas price at the Chicago Citygate began the week last Wednesday at $2.42/MMBtu, rose to a mid-report week high of $2.59/MMBtu on Friday, and settled at $2.32/MMBtu yesterday. On the West Coast, the price at the PG&E Citygate began the week at $2.82/MMBtu, rose slightly in the middle of the report week, and ended yesterday at $2.55/MMBtu.

Northeast prices mixed. In the Northeast, prices at major market hubs declined Wednesday-to-Wednesday. At the Algonquin Citygate, which serves Boston, prices ended the week at $4.40/MMBtu, down 36¢ from the beginning of the week. However, prices at Algonquin rose to $5.93/MMBtu on Tuesday with forecasts of the coldest temperatures so far this winter arriving on Wednesday. Similarly, at Transcontinental Pipeline's Zone 6 trading point serving New York City, prices fell from $3.01/MMBtu last Wednesday to $2.83/MMBtu yesterday, but rose to $6.81/MMBtu on Tuesday. Other market-area pricing points in the Northeast increased slightly week over week. Prices at Iroquois Pipeline's Zone 1 and Zone 2 trading points, which serve areas in New York state, both increased slightly this week.

Marcellus prices up. Week-over-week, prices at major Marcellus trading hubs increased slightly but remained relatively low. At Tennessee's Zone 4 Marcellus trading point, prices began at $1.31/MMBtu last Wednesday, and ended the week at $1.33/MMBtu yesterday. Similarly, on Transco's Leidy Line, prices increased from $1.34/MMBtu to $1.38/MMBtu Wednesday-to-Wednesday.

Production rises. Dry natural gas production rose 0.3% week on week, reversing losses from freeze-offs that were reported last week, according to Bentek Energy. Imports of natural gas from Canada to the United States rose 3.6% from last week, with a 5.3% increase in the West and a 12.0% increase in the Midwest, offsetting overall declines in pipeline imports to the Northeast. LNG sendout rose 20.8% this week. The increase in LNG sendout and pipeline imports likely was in response to increased heating demand as temperatures dropped in the back half of the report week.

Consumption rises. Total U.S. consumption rose 1.4% this week, with increases concentrated at the end of the report week, according to Bentek. Residential and commercial consumption rose 1.6% this week and hit its highest level so far this heating season on Wednesday. Industrial consumption rose 0.2%, while consumption of natural gas for power generation rose 1.9%. Exports to Mexico rose 6.1%. According to Bentek, pipeline exports to Mexico have recently risen to record levels, likely been driven by the Los Ramones Phase II North pipeline coming online in December 2015. The new pipeline capacity flows Eagle Ford natural gas in Texas to central Mexico. When completed, the entire $2.3 billion, 746-mile Los Ramones pipeline will be able to carry 2.1 billion cubic feet per day of natural gas.

more price data

Storage

Net storage withdrawals are smaller than the five-year average and last year's withdrawals. The net withdrawal for the storage week was 168 Bcf compared with the 113 Bcf net storage withdrawal reported the previous week. This withdrawal compares with the five-year (2011–15) average net withdrawal of 178 Bcf for the week and last year's withdrawal of 220 Bcf for the same week. The working natural gas inventory for the storage week ending January 8 totaled 3,475 Bcf, which was 587 Bcf (20%) higher than last year at this time and 474 Bcf (16%) higher than the five-year average for this week.

Storage withdrawals are smaller than market expectations. Market expectations, on average, called for a withdrawal of 178 Bcf for this week. When the EIA storage report was released at 10:30 a.m. on January 14, the February Nymex price fell about 5¢/MMBtu, to about $2.18/MMBtu, and remained around that level in the following hour.

Temperatures during the storage report week are close to normal. Temperatures in the Lower 48 states averaged 34°F for the storage report week, 1°F warmer than the 30-year normal temperature and 2°F warmer than the average temperature during the same week last year. There were 215 population-weighted heating degree days (HDD) during this report week, 6 HDD more than the five-year average and 18 HDD fewer than during the same period last year.

more storage data

See also:

U.S. natural gas net imports


Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
07-Jan
Fri,
08-Jan
Mon,
11-Jan
Tue,
12-Jan
Wed,
13-Jan
Henry Hub
2.35
2.47
2.53
2.38
2.30
New York
2.61
3.21
4.55
6.81
2.83
Chicago
2.42
2.59
2.57
2.41
2.32
Cal. Comp. Avg,*
2.61
2.69
2.63
2.47
2.38
Futures ($/MMBtu)
February contract
2.382
2.472
2.396
2.257
2.269
March contract
2.394
2.471
2.389
2.261
2.290
*Avg. of NGI's reported prices for: Malin, PG&E citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (1/6/16 - 1/13/16)
Percent change for week compared with:
 
last year
last week
Gross production
1.73%
0.29%
Dry production
1.71%
0.28%
Canadian imports
-21.92%
3.63%
      West (net)
-1.04%
5.32%
      Midwest (net)
-25.19%
12.02%
      Northeast (net)
-56.23%
-19.77%
LNG imports
-74.41%
20.83%
Total supply
-1.66%
0.59%
Source: BENTEK Energy LLC
U.S. consumption - Gas Week: (1/6/16 - 1/13/16)
Percent change for week compared with:
 
last year
last week
U.S. consumption
-12.2%
1.4%
Power
2.9%
1.9%
Industrial
-6.5%
0.2%
Residential/commercial
-21.0%
1.6%
Total demand
-11.0%
1.5%
Source: BENTEK Energy LLC
Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, January 08, 2016
Change from
 
last week
last year
Oil rigs
516
-3.73%
-63.69%
Natural gas rigs
148
-8.64%
-55.02%
Miscellaneous
0
0.00%
0.00%
Rig numbers by type
Fri, January 08, 2016
Change from
 
last week
last year
Vertical
81
-8.99%
-71.88%
Horizontal
519
-5.46%
-60.11%
Directional
64
6.67%
-60.25%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (bcf)
Region
2016-01-08
2016-01-01
change
East
802
857
-55
Midwest
942
983
-41
Mountain
177
185
-8
Pacific
295
313
-18
South Central
1,259
1,305
-46
Total
3,475
3,643
-168
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(1/8/15)
5-year average
(2011-2015)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
692
15.9
711
12.8
West
785
20.0
809
16.4
Producing
143
23.8
171
3.5
Total
2,888
20.3
3,001
15.8
Source: U.S. Energy Information Administration


Temperature -- heating & cooling degree days (week ending Jan 07)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
254
-22
-11
0
0
0
Middle Atlantic
253
2
-3
0
0
0
E N Central
262
55
-54
0
0
0
W N Central
269
38
-88
0
0
0
South Atlantic
182
0
23
6
-1
-6
E S Central
191
-20
15
0
-2
0
W S Central
143
16
-29
0
-3
0
Mountain
242
-3
-18
0
0
0
Pacific
140
-1
25
0
0
0
United States
215
-6
-18
1
-1
-1
Note: HDD = heating degree-day; CDD = cooling degree-day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending Jan 07, 2016

Mean Temperature (F) 7-Day Mean ending Jan 07, 2016

Source: NOAA/National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending Jan 07, 2016

Mean Temperature Anomaly (F) 7-Day Mean ending Jan 07, 2016

Source: NOAA/National Weather Service