Friday, November 4, 2016

Natural Gas: EIA Weekly Supply/Demand Report

Dec. 2016 futures 2.767 -0.002
Jan. 2017 futures 2.937 -0.012

From the Energy Information Administration:

U.S. Natural Gas Supply and Demand, April to October, Change From 2015 To 2016

In the News:
2016 injection season sees record natural gas demand
Total natural gas demand in the Lower 48 states reached record levels during the 2016 injection season (April through October). According to data from PointLogic, natural gas consumption and net exports averaged 71.4 billion cubic feet per day (Bcf/d)—2.2 Bcf/d above the 2015 injection season, which held the previous record. However, the total supply of natural gas decreased by an average of 1.1 Bcf/d compared to the 2015 injection season, according to PointLogic. Several factors contributed to the narrowing of supply and demand over this period:
  • The rise in natural gas use for electricity generation (power burn) was a primary driver of natural gas demand. According to PointLogic data, power burn over the 2016 injection season averaged 2.2 Bcf/d more than in the 2015 injection season. The combination of a hot summer and more natural gas-fired power plants led to multiple days of record power burn.
  • The opening of Sabine Pass, the first liquefied natural gas (LNG) export terminal in the Lower 48 states, marked the onset of a new demand source. Deliveries to Sabine Pass averaged 0.6 Bcf/d over the injection season. Net exports to Mexico also increased as new cross-border pipelines came online.
  • Lower natural gas prices lessened the incentive to produce natural gas. The Henry Hub spot price over the injection season averaged $2.56 per million British thermal units (MMBtu), 12¢ lower than in the 2015 injection season. In addition, rig counts were at record lows. The natural gas rig count from Baker Hughes averaged 90 over the 2016 injection season, 58% lower than in the 2015 injection season.
Other trends had some countervailing effects. Residential/commercial consumption over the injection season fell by an average of 1.0 Bcf/d from 2015, as warmer-than-normal weather during September and October reduced the demand for natural gas-fired heating. Price premiums on winter futures contracts relative to injection-season spot prices equaled or exceeded those in 2015. This incentive to store gas for winter sale seems to have been overshadowed by record-high storage levels at the start of the season; injection rates from April through October were, on average, 39% below those in the 2015 injection season....
 Mean Temperature (F) 7-Day Mean ending Oct 27, 2016
Natural Gas: Inventory Additions A Bit Below Expectations, Prices Up 1%