Friday, February 26, 2016

Natural Gas: EIA Weekly Supply/Demand Report

Front futures: $1.765 down 2.0 cents after touching $1.761 and looking weak.
The last couple weeks action:
From the Energy Information Administration:

In the News:
Cheniere’s Sabine Pass ships first LNG cargo from the U.S. Lower 48
Sabine Pass, the first liquefied natural gas (LNG) export terminal to be constructed in the Lower 48 states, shipped its first cargo of domestically sourced natural gas on Wednesday. The LNG is being carried aboard the LNG tanker Asia Vision to Brazil's TRBA (Bahia) offshore terminal. Sabine Pass is expected to load several commissioning cargos as part of its start-up process, after which it will need the approval from the Federal Energy Regulatory Commission to operate commercially. Previously, the United States has only been exporting LNG from Alaska and occasionally re-exporting LNG from the import terminals in the Lower 48 states.

Sabine Pass, located in Cameron Parish, Louisiana, has completed construction of the first two of its six liquefaction trains, each with a capacity to liquefy 0.55 billion cubic feet per day (Bcf/d) of natural gas. Commissioning of the first liquefaction train began in the fall of 2015, but several mechanical issues delayed the start-up. Three other trains at Sabine Pass are currently under construction and are scheduled to come online in 2017-19, while the sixth train is waiting for a final investment decision.

Six other liquefaction projects are scheduled to come online this year in Australia, Malaysia, and Indonesia. They will add approximately 8% to the total global liquefaction capacity, while the two trains at Sabine Pass will add 2% to the total.

The five LNG export facilities currently under construction in the United States, including Sabine Pass, will have a total liquefaction capacity of 9.2 Bcf/d, which is equivalent to 13% of current domestic natural gas production. Nearly all of this capacity has been fully or partially contracted and is scheduled to be in service by 2019. Once all facilities under construction become operational, the United States will become the third-largest liquefaction capacity holder in the world after Australia and Qatar....MORE 
Natural gas prices decline. Prices began the week at low levels and declined further at most locations across the country as weather was mild and consumption was relatively low. The Henry Hub spot price fell from $1.91/MMBtu last Wednesday to $1.79/MMBtu yesterday, February 24. Declines were similar at other major market locations. At the Chicago Citygate, the spot price fell from $1.91 /MMBtu last Wednesday to $1.80/MMBtu yesterday. At the SoCal Citygate, prices fell from $1.91/MMBtu last week to $1.87/MMBtu yesterday.

Northeast prices decline. Prices in the Boston area declined substantially this week on warmer temperatures. At the Algonquin Citygate, which serves Boston, prices fell from $4.18/MMBtu at the beginning of the report week to $1.70/MMBtu yesterday. At Transcontinental Pipeline’s Zone 6 trading point serving New York City, prices began the week at $2.12/MMBtu, and ended the week at $1.78/MMBtu. Transco’s Zone 6 non-New York trading point, which serves Pennsylvania and New Jersey consumers, began the report week at $2.03/MMBtu and settled yesterday at $1.74/MMBtu.

Marcellus prices fall. At Dominion South in northwest Pennsylvania, prices began at $1.53/MMBtu last Wednesday and ended the report week at $1.36/MMBtu yesterday. On Transco's Leidy Line in northern Pennsylvania, prices remained flat, beginning and ending the report week at $1.32/MMBtu.

Nymex prices fall. The price of the Nymex March 2016 contract fell this week from $1.942/MMBtu last Wednesday to $1.778/MMBtu yesterday. The price of the 12-month strip (the 12 contracts between March 2016 and February 2017) fell from $2.299/MMBtu last Wednesday to $2.144/MMBtu yesterday. Earlier today, on the final day of trading for the March contract, the price settled at $1.711.

Production falls slightly. Dry natural gas production fell 0.2% from the previous week, but remained 2.9% greater than the same time last year. U.S. imports of natural gas from Canada declined by 24.4%. Pipeline imports to the Northeast, Midwest, and West all declined substantially. LNG sendout also declined from the previous week.

Consumption declines. Warmer-than-normal weather led to a 19.7% decline in U.S. consumption. The large decline was driven by a 34.0% decrease in residential/commercial consumption, but consumption declined in all sectors. Consumption of natural gas for electric power generation fell by 5.9%, and industrial consumption fell by 7.1%. U.S. exports of natural gas to Mexico fell by 1.2%, but were 38.5% greater than the same week a year ago....MORE