EIA Natural Gas Weekly Update

Front (Dec.) futures $2.8490 down 0.1460 (4.87%).

From the Energy Information Administration:

for week ending November 11, 2020   |  Release date:  November 12, 2020 

In the News:

Henry Hub price reaches $3.00 for first time since March 2019

On October 22, the natural gas spot price at the Henry Hub reached $3.00 per million British thermal units (MMBtu), its highest value since March 2019, according to Natural Gas Intelligence. Tightening natural gas supply and demand balances toward the end of October—driven by increasing liquefied natural gas (LNG) export demand and greater heating demand—have led the price at the Henry Hub to more than double in October from a low of $1.34/MMBtu on October 4.

Increased demand for U.S LNG exports has put upward pressure on the price at Henry Hub. Following a summer of LNG cargo cancellations and hurricane-related disruptions, LNG feedgas demand has recovered to pre-COVID levels. According to IHS Markit, since late-August, LNG feedgas volumes have increased by more than 8.0 billion cubic feet per day (Bcf/d), rising from 2.3 Bcf/d in the aftermath of Hurricane Laura, which made landfall on August 27, to a record high 10.4 Bcf/d by the end of October. The increase in LNG exports reflects a higher spread between the natural gas spot price at the Henry Hub and the Japan/Korea Marker (JKM) price—S&P Global Platts’ published price for LNG spot cargoes delivered into Asian markets—which improves netbacks from LNG exports leaving the United States.

Cooler-than-normal temperatures in the second half of October, particularly in the Great Plains and the Upper Midwest, have also contributed to tightening market conditions as a result of increases in natural gas heating demand. According to IHS Markit, combined residential and commercial natural gas consumption increased from a low of 8.3 Bcf/d on October 10 to about 27.0 Bcf/d by the end of October and averaged nearly 2.0 Bcf/d higher in October 2020 compared with October 2019.

The recent increases in natural gas demand have accompanied steady declines in natural gas production in 2020 that resulted from low natural gas and oil prices. Dry natural gas production has declined 6.7 Bcf/d since the start of the year, falling to an average of 87.6 Bcf/d in October, according to IHS Markit.

Mild temperatures in early November and a resulting decline in residential and commercial natural gas consumption have led to a slight pullback in the Henry Hub price in recent days. The Henry Hub price fell to as low as $2.59/MMBtu on November 9.....

....U.S. LNG exports decrease week over week. Eighteen LNG vessels (eight from Sabine Pass, four from Cameron, three from Freeport, and one each from Elba Island, Cove Point, and Corpus Christi) with a combined LNG-carrying capacity of 65 Bcf departed the United States between November 5 and November 11, 2020, according to shipping data provided by Bloomberg Finance, L.P....

 

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