Friday, October 23, 2015

Long Is Wrong: EIA Natural Gas Supply/Demand Report

Front futures down 2.47% at $2.3270.
As our attentive (wary) readers may remember:
Sept. 14 
Natural Gas: This Could be The Year Prices Go Down In Winter 
Combine an El Niño winter with an uptick in production and you've got dogs and cats living together, mass hysteria at the NYMEX, etc.... 
Sept. 4 
Natural Gas: EIA Weekly Supply/Demand Report 
As we enter the autumn shoulder season, our obsessive preoccupation with supply gives way to El Niño and whither/whether weather.More on that next week....
Here's the Weekly Update's temperature anomaly map for last week:

Deviation between average and normal (°F)
7-Day Mean ending Oct 15, 2015
Mean Temperature Anomaly (F) 7-Day Mean ending Oct 15, 2015
Source: NOAA/National Weather Service

From the Energy Information Administration:

Natural Gas Weekly Update
Price changes are down and small in most locations, with the exception of the Northeast. The Henry Hub spot price began the week at $2.44/MMBtu, fluctuated slightly through the report week, and then settled at $2.36/MMBtu yesterday. At the Chicago Citygate, prices fell 16¢, from $2.50/MMBtu to $2.34/MMBtu. While most of the Midwest prices had similar declines, prices at St. Clair, which represents gas delivered from the TransCanada PipeLines system into Michigan at St. Clair, rose by 11¢, likely because of colder Canadian temperatures. Price declines also occurred in the West. PG&E Citygate, serving Northern California, started the report week at $3.02/MMBtu and decreased 20¢ to close at $2.82/MMBtu yesterday. 
Temperatures began the report week slightly above average for most of the nation, but by the weekend cooler temperatures started in the Great Lakes, and moved south and east. Friday brought temperatures of more than 10° below normal for the upper Midwest. This below-average cold remained in the East until Tuesday. Warmer temperatures at the end of the report week reduced overall daily consumption for the residential/commercial and power sectors. 
Prices mixed in the Northeast. In the Northeast prices varied in response to temperatures and to maintenance, especially in New England where temperatures were as much as 13° below normal through the weekend, but returned to seasonal norms by Tuesday. Maintenance on the Burrillville compressor station (Rhode Island) began on Thursday, October 15, and limited mainline capacity to 630 MMcf/d, down from 800 MMcf/d. This maintenance will continue until Friday, October 23. Algonquin pipeline also posted constraints for gas quality problems at the Mendon, Massachusetts, interconnect with Tennessee Gas Pipeline that will restrict flow to 100 MMcf/d, down from normal capacity of approximately 275 MMcf/d. Both of these maintenance events placed upward pressure on Algonquin Citygate prices during this period.Algonquin Citygate, which serves Boston-area consumers, opened at $2.83/MMBtu, rose to $4.81/MMBtu on Friday and again to $4.94/MMBtu on Monday, dropping to $2.82/MMBtu with warmer seasonal temperature to end the week yesterday. At Transcontinental Pipeline's Zone 6 trading point, which serves New York City, prices were less affected by temperature, opening Wednesday, October 14, at $2.38/MMBtu, rising to $2.44/MMBtu for the weekend (Friday), then settling down at $2.17/MMBtu yesterday. 
Marcellus prices rise. Though still low, Marcellus prices rose through the report week by more than 20%. At Tennessee's Zone 4 Marcellus trading point, prices began at 89¢/MMBtu last Wednesday and rose to $1.19/MMBtu yesterday. Similarly, on Transco's Leidy Line prices rose from 98¢/MMBtu to $1.15/MMBtu Wednesday to Wednesday. At Dominion South, which serves customers in portions of Pennsylvania, Ohio, Maryland, West Virginia, and Virginia, prices began the report week at $1.18/MMBtu, fluctuated through the week to as high as $1.71/MMBtu on Monday, and closed yesterday at $1.60/MMBtu. 
Nymex prices are down. The price of the near-month (November 2015) contract fell by 11¢ from $2.518/MMBtu last Wednesday to $2.404/MMBtu yesterday. The price of the 12-month strip (the average of the 12 contracts between November 2015 and October 2016) fell 10¢ from $2.782/MMBtu last Wednesday to $2.685/MMBtu yesterday, likely because of above-normal fall temperature forecasts. 
Supply decreases. Total supply fell again this week by 0.1%, with a 0.2% decrease in dry production leading the decline, according to data from Bentek Energy. The decrease in Appalachian Basin production, which accounted for most of the decrease, was largely attributed to maintenance activity on Tennessee Gas Pipeline and Transco pipeline at several gathering lines and production points, including the Latini Dehy and Liberty Dehydration stations in Pennsylvania, which concluded yesterday. Although dry production declined, it is still 2.4% greater than the year-ago level. Imports from Canada rose by 4.1% week-over-week. Sendout of LNG increased by 3.3% over last week, but still remains at minimal levels. 
Consumption increases slightly. Week-over-week consumption rose by 5.3%. Residential/commercial and industrial consumption rose this report period by 29.8% and 2.3%, respectively, while consumption of natural gas for power generation (power burn) fell 6.7%. Exports to Mexico fell for the week, down 3%, but remain higher than 2014 levels, up 56% over this time last year. 
more price data 
StorageStorage level is equal to five-year maximum. With a net injection reported for the week ending October 16 of 81 Bcf, inventories rose to 3,814 Bcf, equal to the record storage level for the week reached in 2012. This injection compares with the five-year average increase of 86 Bcf for the week and last year's increase of 94 Bcf. Working gas inventories for the report week were 434 Bcf (13%) higher than last year at this time and 163 Bcf (4%) higher than the five-year (2010-14) average....