for week ending October 9, 2019 | Release date: October 10, 2019
In the News:
EIA’s Winter Fuels Outlook forecasts lower natural gas expenditures for households than last winter
In the 2019 Winter Fuels Outlook, released on October 8, the U.S. Energy Information Administration (EIA) forecasts expenditures for residential space heating with natural gas to be 1% (about $8) lower during winter 2019‒20 (October to March) than last year but 5% higher than the five-year average. Residential natural gas expenditures are a result of both the volume of natural gas consumed in households during the winter and the price of delivered natural gas.
The estimated expenditures this winter, about $580 per household on average, are lower primarily because expected demand for space heating is lower than last year. The National Oceanic and Atmospheric Administration (NOAA) expects temperatures for this coming winter to be warmer than last winter, forecasting 4% fewer heating degree days (HDDs) across the United States.
In the residential sector, because natural gas demand closely follows heating demand and expenditures are tied to consumption, the weather is a key factor in EIA’s forecasts of residential natural gas demand and expenditures. Excluding year-round natural gas consumption for water heating, cooking, and (in some households) clothes drying, most incremental residential consumption is for space heating. So, in the summer months, natural gas consumption remains at a relatively low, flat level. All growth outside of the baseline, year-round end uses is the result of heating demand.
The forecasted decline in heating demand associated with lower heating degree days is expected to offset higher delivered residential natural gas prices in most regions of the United States. EIA forecasts the U.S. average residential natural gas price to be $10.03 per thousand cubic feet (Mcf) this winter, up from $9.76/Mcf last winter. Prices across the country are also highly variable, reflecting both regional supply/demand dynamics and infrastructure constraints. EIA forecasts residential natural gas prices to rise by 3% in the West, 5% in the South, and 8% in the Midwest regions, but to decline by 6% in the Northeast as new infrastructure allows more natural gas to be transported throughout the region, reducing transportation delivery costs.
EIA expects wholesale natural gas prices to be 24% lower this winter, with spot prices at Henry Hub averaging $2.66/Mcf, because of strong production growth and natural gas storage inventory levels that are higher than the five-year average. However, changes in natural gas spot prices do not pass through to residential customers immediately.
Overview:....MUCH MORE
(For the week ending Wednesday, October 9, 2019)
- Natural gas spot price movements were mixed this report week (Wednesday, October 2 to Wednesday, October 9). Henry Hub spot prices fell from $2.30 per million British thermal units (MMBtu) last Wednesday to $2.22/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the November 2019 contract decreased 1¢, from $2.247/MMBtu last Wednesday to $2.234/MMBtu yesterday. The price of the 12-month strip averaging November 2019 through October 2020 futures contracts declined 2¢/MMBtu to $2.368/MMBtu.
- Net injections to working gas totaled 98 billion cubic feet (Bcf) for the week ending October 4. Working natural gas stocks are 3,415 Bcf, which is 16% more than the year-ago level and equal to the five-year (2014–18) average for this week.
- The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 3¢/MMBtu, averaging $5.12/MMBtu for the week ending October 9. The price of natural gasoline, propane, and isobutane fell by 1%, 1%, and 3%, respectively. The price of ethane and butane rose by 6% and 8%, respectively.
- According to Baker Hughes, for the week ending Tuesday, October 1, the natural gas rig count decreased by 2 to 144. The number of oil-directed rigs fell by 3 to 710. The total rig count decreased by 5, and it now stands at 855.
Prices/Supply/Demand: Prices are mixed across regional markets. This report week (Wednesday, October 2 to Wednesday, October 9), Henry Hub spot prices fell 8¢ from a high of $2.30/MMBtu last Wednesday to a low of $2.22/MMBtu yesterday. With the exception of Texas and in the Southeast, temperatures across most of the Lower 48 states were cooler-than-normal. At the Chicago Citygate, prices decreased 17¢ from $1.91/MMBtu last Wednesday to $1.74/MMBtu yesterday...
Front futures up 0.022 at 2.240
