Friday, December 18, 2015

Natural Gas-- EIA Weekly Supply/Demand Report: Is it Hot in Here?

January futures $1.790 +0.035; February's $1.888 +0.015.
From the Energy Information Administration:
In the News:
Natural Gas Prices at 16-Year Low
Natural gas spot prices hit a 16-year low this week, with the Henry Hub spot price settling at $1.65 per million British thermal units (MMBtu) on Tuesday, December 15. Futures prices also settled at their lowest level since March 1999, with the near-month contract settling at $1.790/MMBtu on Wednesday.

Although the January contract only fell below $2/MMBtu this week, prices have been relatively low for several months. Strong production growth and ample storage inventories have contributed to the recent low-price environment; production hit three consecutive records in July, August, and September of this year. Storage inventories topped out at 4,009 billion cubic feet (Bcf) the week ending November 20, 2015.

Warmer-than-normal temperatures since the beginning of November, the start of the heating season, have contributed to lower inventory withdrawals. From October 30 through December 11, storage inventories fell by 85 Bcf. This drop compares to the five-year average decline over this period of 258 Bcf, and to a decline of 253 Bcf last year over this period. In addition to strong production growth and robust inventories, forecasts for a continued warmer-than-normal winter also have contributed to the relatively low futures prices.

The last time the Henry Hub spot price remained below $2/MMBtu for a sustained period of time was in April 2012. After a warm winter, inventories were at their highest level headed into the injection season. High inventories, combined with production growth at the time, resulted in an average price of $1.95/MMBtu for the month of April 2012. Much of the surplus of natural gas at the end of the winter heating season was used by the electric power sector during the summer.

(For the Week Ending Wednesday, December 16, 2015)
  • Natural gas prices are down again at most trading locations for the report week (Wednesday, December 9, through Wednesday, December 16). The Henry Hub spot price began the week at $2.00/MMBtu last Wednesday and ended at $1.68/MMBtu yesterday. Prices have not been this low since March 1999.
  • At the New York Mercantile Exchange (Nymex), the January Nymex price began at $2.062/MMBtu last Wednesday and settled at $1.790/MMBtu yesterday.
  • Working natural gas in storage decreased by 34 Bcf, declining to 3,846 Bcf as of Friday, December 11. The net withdrawal from storage resulted in storage levels 16% above a year ago and 9% above the five-year (2010–14) average for this week.
  • The total oil and natural gas rig count fell by 28 units this week, with 709 units in service for the week ending Friday, December 11, according to data from Baker Hughes Incorporated. This is the lowest combined oil and natural rig count since September 1999. The oil rig count drove the decline, decreasing by 21 units to 524, and the natural gas rig count decreased by 7 units to 185 units.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, decreased by 6.2% to $4.56/MMBtu for the week ending Friday, December 11. Natural gas liquids spot prices fell across the board; ethane fell by 7.4%, propane fell by 5.2%, butane fell by 8.9%, isobutane fell by 9.8%, and natural gasoline fell by 3.3%....

This year its all about El NiƱo with the biggest impact being West North Central to Chicago running 6 to 14 degrees above average:
Mean Temperature Anomaly (F) 7-Day Mean ending Dec 10, 2015