Friday, August 14, 2020

EIA Natural Gas Weekly Update

September futures 2.2060, up 0.0240 (+1.1%)
EIA Natural Gas Storage Report, August 13: Coin Flip With Slight Upside Bias

From the Energy Information Administration:
for week ending August 12, 2020   |  Release date:  August 13, 2020
In the News:
EIA forecasts resilient, growing ethane production through 2021
EIA’s August Short-Term Energy Outlook (STEO) calls for continuing growth in ethane production to satisfy growing demand, including demand from three new U.S. petrochemical plants that started up in the first half of 2020 and use ethane as feedstock. EIA forecasts ethane production will exceed 2 million b/d by the last quarter of 2020—nearly 9% higher than the 1.92 million b/d reported for the first quarter of 2020. Ethane production will continue to grow through 2021, reaching nearly 2.27 million b/d by the last quarter of 2021—18% higher than in the first quarter of 2020.

In contrast, EIA forecasts U.S. crude oil and marketed natural gas production to decline by close to 10% from the first quarter of 2020 to the last quarter of 2021. EIA expects that crude oil production will remain lower than the average 12.75 million b/d achieved in the first quarter of 2020 throughout the forecast period, recovering to a peak of 11.40 million b/d by the last quarter of 2021. EIA forecasts that natural gas production will also remain lower than the 98.3 billion cubic feet per day (Bcf/d) production level reached in the first quarter of 2020, and final quarter 2021 production is forecast at 89.3 Bcf/d.

Ethane is separated from natural gas at natural gas processing plants along with other natural gas plant liquids (NGPL) (propane, normal butane, isobutane, and natural gasoline). However, not all ethane is recovered. Ethane can be left in the natural gas stream, a process known as ethane rejection, to be sold along with natural gas instead of being separated at natural gas processing plants. The decision to recover ethane at natural gas processing plants is based primarily on the price of ethane relative to natural gas on a heating-value equivalent basis.....
.....Supply rises. According to data from IHS Markit, the average total supply of natural gas rose by 1.3% compared with the previous report week. Dry natural gas production grew by 1.2% compared with the previous report week. Average net imports from Canada increased by 2.6% from last week.

Demand rises slightly with gains in the power sector and LNG feedgas. Total U.S. consumption of natural gas rose by 0.5% compared with the previous report week, according to data from IHS Markit. Feedgas to liquefied natural gas (LNG) terminals were the largest contributor to rising consumption this week, increasing 14% and rising from an average of 3.8 Bcf last week to 4.4 Bcf this week. Natural gas consumed for power generation climbed by 0.9% week over week. In the residential and commercial sectors, consumption increased by 1.9%. Industrial sector consumption decreased by 0.7% week over week. Natural gas exports to Mexico decreased 1.7%.

U.S. LNG exports increase week over week. Eight LNG vessels (three from Cameron, two from Cove Point, and one each from Sabine Pass, Corpus Christi, and Freeport) with a combined LNG-carrying capacity of 29 Bcf departed the United States between August 6 and August 12, 2020, according to shipping data provided by Marine Traffic.....