According to the U.S. Energy Information Administration (EIA) website article published on April 13, 2023:
Net withdrawals from working natural gas stocks were the lowest in seven years during the 2022–23 heating season
Net withdrawals of natural gas from underground storage facilities totaled 1,707 billion cubic feet (Bcf) during the 2022–23 heating season (November–March)—the lowest on record since the 2015–16 heating season. Working natural gas in underground storage facilities in the Lower 48 states totaled 1,830 Bcf as of March 31, 2023, according to the Weekly Natural Gas Storage Report (WNGSR), exceeding the five-year average (2018–22) by 294 Bcf (19%), after entering the heating season at a 110 Bcf (3%) deficit to the five-year average.
Increased natural gas production more than offset increases in natural gas consumption during the 2022–23 heating season, resulting in lower than normal withdrawals from working natural gas storage. Overall, natural gas production increased 5.5%, or 5.2 billion cubic feet per day (Bcf/d), compared with the 2021–22 heating season, while U.S. natural gas consumption increased 1.7% (1.6 Bcf/d) over the same period, according to data from S&P Global Commodity Insights. Electric power sector consumption increased 9.0% (2.6 Bcf/d), and residential and commercial consumption fell 2.7% (nearly 1.0 Bcf/d). Relatively mild temperatures mitigated heating demand as heating degree days (HDD) fell 6% below normal in the Lower 48 states during the 2022–23 heating season. Natural gas exports declined slightly as pipeline exports fell 3.8% (0.2 Bcf/d) and as liquefied natural gas feedstock deliveries rose 1.0% (0.1 Bcf/d) from the year-ago level.
This year’s heating season was characterized by disparate regional weather patterns. The areas west of the Rocky Mountains, including the Mountain and Pacific regions, reported significantly below-normal temperatures, while most of the rest of the Lower 48 states experienced above-normal temperatures. HDDs were 23% above normal in the Pacific region and 12% above normal in the Mountain region. Below-normal temperatures, which led to increased natural gas consumption, left working natural gas stocks in the Pacific storage region at their lowest levels on record, totaling 73 Bcf—57% less than the five-year average.
Working natural gas stocks in the South Central storage region exceeded the five-year average by 39% (256 Bcf) as a result of relatively mild temperatures and consequently historically low net withdrawals from working natural gas stocks. Above-normal temperatures were particularly prominent early in 2023, and HDDs fell below normal during 9 of the first 10 weeks of the year. During this same period, the surplus to the five-year average increased by 644 Bcf, rising during 8 of the 10 weeks, including a weekly net increase reported for the first week of 2023.
See Natural Gas Storage Dashboard for more updates on the storage market conditions.
Market Highlights:
(For the week ending Wednesday, April 12, 2023)
Prices
- Henry Hub spot price: The Henry Hub spot price rose 4 cents from $2.17 per million British thermal units (MMBtu) last Wednesday to $2.21/MMBtu yesterday.
- Henry Hub futures prices: The price of the May 2023 NYMEX contract decreased 6.2 cents, from $2.155/MMBtu last Wednesday to $2.093/MMBtu yesterday. The price of the 12-month strip averaging May 2023 through April 2024 futures contracts declined 10.3 cents to $2.897/MMBtu.
- Select regional spot prices: Natural gas spot prices fell at most locations this report week (Wednesday, April 5, to Wednesday, April 12). Week-over-week price declines at major pricing hubs ranged from a decrease of $1.52/MMBtu at PG&E Citygate to a decrease of 9 cents/MMBtu at the Houston Ship Channel.
- Prices in Northeast markets, all currently below $2.00/MMBtu, are among the lowest in the United States. At the Algonquin Citygate, which serves Boston-area consumers, the price fell 33 cents from $2.03/MMBtu last Wednesday to $1.70/MMBtu yesterday. In the Appalachia production region, the Tennessee Zone 4 Marcellus spot price decreased 31 cents from $1.72/MMBtu last Wednesday to $1.41/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania fell 29 cents from $1.76/MMBtu last Wednesday to $1.47/MMBtu yesterday. Natural gas consumption in the Northeast decreased 4%, or 0.8 billion cubic feet per day (Bcf/d) week over week, according to data from S&P Global Commodity Insights. This decrease was led by a 15% (1.2 Bcf/d) decline in residential and commercial sector consumption as warmer weather reduced heating demand. Natural gas storage inventories in the East region are 37% above year-ago levels.
- Although falling week over week, prices in West Coast markets remain elevated and are currently the highest in the United States. The price at SoCal Citygate in Southern California decreased 66 cents from $8.65/MMBtu last Wednesday to $7.99/MMBtu yesterday, and the price at PG&E Citygate in Northern California fell $1.52, down from $7.31/MMBtu last Wednesday to $5.79/MMBtu yesterday. According to S&P Global Commodity Insights, natural gas consumption in the West declined 13% (1.4 Bcf/d) week over week, led by a 34% (1.5 Bcf/d) decline in residential and commercial sector consumption. Natural gas inventories in the Pacific region, in contrast to the East region, are more than 50% below year-ago levels, even after SoCal Gas increased working gas capacity at Aliso Canyon at the end of 2021.
- Price changes along the Gulf Coast are mixed this report week. The Henry Hub rose 4 cents to $2.21/MMBtu yesterday, while the price at the Houston Ship Channel decreased 9 cents from $1.90/MMBtu last Wednesday to $1.81/MMBtu yesterday. In West Texas, the price at the Waha Hub, which is located near Permian Basin production activities, fell 73 cents this report week, from $1.69/MMBtu last Wednesday to $0.96/MMBtu yesterday. The Waha Hub traded $1.25 below the Henry Hub price yesterday, compared with last Wednesday when it traded 48 cents below the Henry Hub price. Kinder Morgan, operator of the Gulf Coast Express Pipeline, which moves natural gas from the Permian Basin to South Texas markets, has extended inspections and planned maintenance of compressors at Rankin, Devils River, and Big Wells Compressor Stations in West Texas through April 15, resulting in reduced available pipeline capacity to move natural gas out of the basin.
Daily spot prices by region are available on the EIA website.
- International futures prices: International natural gas futures prices decreased this report week. According to Bloomberg Finance, L.P., weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia fell 35 cents to a weekly average of $12.61/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands fell $1.12 to a weekly average of $13.84/MMBtu. In the same week last year (week ending April 13, 2022), the prices were $33.12/MMBtu in East Asia and $32.91/MMBtu at TTF.
- Natural gas plant liquids (NGPL) prices: The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 9 cents/MMBtu, averaging $7.44/MMBtu for the week ending April 12. Weekly average ethane prices fell 3%, while natural gas prices at the Houston Ship Channel rose 4% week over week, narrowing the ethane premium to natural gas by 11%. Ethylene spot prices remained relatively unchanged, while the ethylene to ethane premium rose 1%. The Brent crude oil price rose 3%, while propane prices rose 2%, resulting in a 6% increase in the propane discount relative to crude oil. Normal butane prices rose 3%, while isobutane and natural gasoline prices each rose 2%.
Supply and Demand
- Supply: According to data from S&P Global Commodity Insights, the average total supply of natural gas rose by 0.3% (0.3 Bcf/d) compared with the previous report week. Dry natural gas production grew by 0.1% (0.1 Bcf/d), and average net imports from Canada increased by 5.4% (0.2 Bcf/d) from last week.
- Demand: Total U.S. consumption of natural gas fell by 5.7% (4.2 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights. In the residential and commercial sectors, natural gas consumption declined by 17.0% (3.9 Bcf/d) week over week. Natural gas consumed for power generation declined by 0.6% (0.2 Bcf/d), and natural gas consumed in the industrial sector decreased by 0.7% (0.2 Bcf/d). Natural gas exports to Mexico decreased 2.1% (0.1 Bcf/d). Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 13.7 Bcf/d, or 0.2 Bcf/d lower than last week.
Liquefied Natural Gas (LNG)
- Pipeline receipts: Overall weekly average natural gas deliveries to U.S. LNG export terminals decreased by 1.5% (0.2 Bcf/d) week over week to average 13.7 Bcf/d this report week, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Louisiana increased by 3.6% (0.3 Bcf/d) to 8.7 Bcf/d, while deliveries to terminals in South Texas decreased by 12.0% (0.5 Bcf/d) to 3.8 Bcf/d. Natural gas deliveries to terminals outside the Gulf Coast were essentially unchanged.
- Vessels departing U.S. ports: Twenty-six LNG vessels (nine from Sabine Pass; four each from Calcasieu Pass, Cameron, and Freeport; three from Corpus Christi; and one each from Cove Point and Elba Island) with a combined LNG-carrying capacity of 96 Bcf departed the United States between April 6 and April 12, according to shipping data provided by Bloomberg Finance, L.P.
Rig Count
- According to Baker Hughes, for the week ending Tuesday, April 4, the natural gas rig count decreased by 2 rigs from a week ago to 158 rigs. The Eagle Ford and an unidentified producing region each dropped one rig. The number of oil-directed rigs decreased by 2 rigs from a week ago to 590 rigs. The Eagle Ford and the Permian each added one rig, while the Cana Woodford, the DJ-Niobrara, the Williston, and an unidentified producing region dropped one rig each. The total rig count, which includes 3 miscellaneous rigs, stands at 751, 62 more rigs than last year at this time.
Storage
- The net injections into storage totaled 25 Bcf for the week ending April 7, compared with the five-year (2018–2022) average net injections of 28 Bcf and last year's net injections of 8 Bcf during the same week. Working natural gas stocks totaled 1,855 Bcf, which is 295 Bcf (19%) more than the five-year average and 460 Bcf (33%) more than last year at this time.
- According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net injections of 20 Bcf to 38 Bcf, with a median estimate of 29 Bcf.
More storage data and analysis can be found on the Natural Gas Storage Dashboard and the Weekly Natural Gas Storage Report.
