for week ending June 10, 2020 | Release date: June 11, 2020
In the News:
EIA forecasts record natural gas storage levels
In the June Short-Term Energy Outlook (STEO), EIA forecasts that total working natural gas in underground storage in the Lower 48 states will reach a record level of 4,089 billion cubic feet (Bcf) by October 31, 2020. This forecast storage level would fill the Lower 48 states’ natural gas storage facilities to 87% of their design capacity of 4,693 Bcf and nearly 96% of their demonstrated peak capacity of 4,261 Bcf.
Following a relatively warm heating season (November 1–March 31), with the smallest total net withdrawals since 2015–16, the Lower 48 states’ working natural gas levels on March 31, 2020, were 19% higher than the five-year (2015–19) average and almost 74% higher than the working natural gas levels as of March 31, 2019. EIA estimates that total natural gas injections in the Lower 48 states from April 1 through the end of October this year will be about 2,080 Bcf, or 1% higher than the five-year average. Despite this near-average injection season, the high starting inventory levels lead to a record storage level by the end of October.
The June STEO forecasts that dry natural gas production in the 2020 injection season (April 1–October 31) will average about 88.9 Bcf/d, a decline of about 4% from the same time last year. Although a decrease from its November 2019 record high of 96.2 billion cubic feet per day (Bcf/d), total U.S. dry natural gas production has remained high by historical standards, resulting in high injection levels of natural gas into storage until recently. The expected decline in natural gas production will slow injection activity during the remainder of the refill season. This decline in natural gas production is primarily a result of low expected prices. EIA forecasts the benchmark Henry Hub price to remain lower than $2.00 per million British thermal units (MMBtu) through August 2020 and rise to $2.25/MMBtu in October 2020.
Overall, total consumption plus net exports of natural gas are expected to remain almost unchanged between the 2019 and 2020 injection seasons. The economic decline resulting from the response to the 2019 novel coronavirus disease (COVID-19) is expected to decrease industrial natural gas consumption in the 2020 injection season to about 19.1 Bcf/d, a decrease of almost 12% from 2019 levels; however, this decline is mostly offset by expected consumption increases in other sectors.
Overview:
(For the week ending Wednesday, June 10, 2020)
- Natural gas spot prices fell at most locations this report week (Wednesday, June 3 to Wednesday, June 10). The Henry Hub spot price fell from $1.77 per million British thermal units (MMBtu) last Wednesday to $1.70/MMBtu yesterday.
- At the New York Mercantile Exchange (Nymex), the price of the July 2020 contract decreased 4¢, from $1.821/MMBtu last Wednesday to $1.780/MMBtu yesterday. The price of the 12-month strip averaging July 2020 through June 2021 futures contracts declined 11¢/MMBtu to $2.332/MMBtu.
- The net injections to working gas totaled 93 billion cubic feet (Bcf) for the week ending June 5. Working natural gas stocks totaled 2,807 Bcf, which is 36% more than the year-ago level and 18% more than the five-year (2015–19) average for this week.
- The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 13¢/MMBtu, averaging $4.60/MMBtu for the week ending June 10. The prices of ethane and natural gasoline fell by 4% and 7%, respectively. The prices of propane, butane, and isobutane rose by 8%, 9%, and 11%, respectively.
- According to Baker Hughes, for the week ending Tuesday, June 2, the natural gas rig count decreased by 1 to 76. The number of oil-directed rigs fell by 16 to 206. The total rig count decreased by 17, and it now stands at the lowest point on record at 284.....
...U.S. LNG exports decrease week over week. Five liquefied natural gas (LNG) vessels (two from each Sabine Pass and Cameron and one from Cove Point) with a combined LNG-carrying capacity of 18 Bcf departed the United States between June 4 – June 10, 2020, according to shipping data provided by Marine Traffic. This weekly export volume is the lowest since the week of June 8 – June 14, 2017....
