Friday, February 24, 2017

Natural Gas: EIA Weekly Supply/Demand Report

As the March contract rolls off here's the soon to be front month April over the last two weeks:
$2.750 up 0.001

From the Energy Information Administration:
for week ending February 22, 2017   |  Release date:  February 23, 2017   |  Next release:  March 2, 2017   
In the News:
Drilling Productivity Report forecasts production rise in six out of seven shale regions
Natural gas gross withdrawals are forecast to increase from February to March in six of the seven most prolific shale regions in the Lower 48 states, according to EIA’s most recent Drilling Productivity Report (DPR). This is the first time since March 2015 that more than five of the seven shale regions have seen month-to-month increases. Through March, the DPR forecasts that only the Eagle Ford shale region has decreasing production; natural gas production in Eagle Ford has been declining since December 2015. The DPR expects total production from the seven shale regions to reach an all-time high of 48.6 billion cubic feet per day (Bcf/d) in February, followed by a new record of 49.1 Bcf/d in March (note these projections do not consider weather, capacity constraints, or changes in realized prices). The previous record production level from these regions was 48.3 Bcf/d in August 2016.

Currently, the seven shale regions covered in the DPR account for more than half of the total natural gas gross withdrawals in the Lower 48 states, compared to about a quarter of the total in 2009. Production from these regions has been increasing at an average annual rate of 14% since 2007. These production rises came as well laterals became longer and overall rig productivity steadily rose. However, the average annual growth rate was at its lowest in 2016 (January through November); gross withdrawals were only 5% higher compared to the same period in 2015....
... Prices/Supply/Demand:
Prices fall sharply everywhere on unseasonably warm weather. This report week (Wednesday, February 15 to Wednesday, February 22), the Henry Hub spot price fell 39¢ from $2.92/MMBtu last Wednesday to $2.53/MMBtu yesterday, a 13% decrease. This is the lowest Henry Hub price since mid-November 2016, when the price dipped nearly to $2.00/MMBtu on mild weather and high storage stocks. Weather was warmer virtually everywhere in the country by the end of the report period, with temperatures breaking records.

At the Chicago Citygate, prices decreased 25¢ to $2.59/MMBtu yesterday. The price at SoCal Citygate decreased 23¢ to $2.82/MMBtu yesterday. Prices at PG&E Citygate in Northern California fell 24¢ to $3.06/MMBtu yesterday.

Northeast prices down sharply. At the Algonquin Citygate, which serves Boston-area consumers, prices went down $1.83 from $4.02/MMBtu last Wednesday to $2.19/MMBtu yesterday. At the Transcontinental Pipeline Zone 6 trading point for New York, prices fell $1.01 to $2.10/MMBtu yesterday.

Several Appalachian price points fell below the $2.00/MMBtu mark this week. Tennessee Zone 4 Marcellus spot prices decreased 53¢ to $1.93/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 56¢ from $2.64/MMBtu last Wednesday to $2.08/MMBtu yesterday.

March Nymex contract down. At the Nymex, the price of the March 2017 contract decreased 33¢, from $2.925/MMBtu last Wednesday to $2.592/MMBtu yesterday. The price of the 12-month strip, averaging March 2017 through February 2018 futures contracts, declined 30¢ to $2.950/MMBtu.
Supply falls slightly. According to data from PointLogic, the average total supply of natural gas fell by 1% compared with the previous week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 12% from last week.

Demand falls across all sectors. Total U.S. consumption of natural gas fell by 15% compared with the previous report week, according to data from PointLogic. Power burn declined by 3%; industrial sector consumption declined by 4%, and residential and commercial sector consumption declined by 29%. Natural gas exports to Mexico decreased 2%....