Spot prices declined at most trading locations across the country during the first half of the report week (Wednesday to Wednesday) amid moderate weather. Some prices increased at the end of the report week, particularly in New England, following a forecast of much colder weather moving into the eastern part of the country. However, the Henry Hub spot price closed yesterday at $3.56/million British thermal units (MMBtu), down 12 cents from $3.68/MMBtu at the beginning of the report week.
At the New York Mercantile Exchange (Nymex), the November 2014 contract ended the week – and its run as prompt month – at $3.728/MMBtu, an increase of $0.069/MMBtu from the previous Wednesday.
Working natural gas in storage rose to 3,480 billion cubic feet (Bcf) as of Friday, October 24, according to the U.S. Energy Information Administration (EIA) Weekly Natural Gas Storage Report (WNGSR). A net increase in storage of 87 Bcf for the week resulted in storage levels 7.8% below year-ago levels and 8.2% below the five-year average for this week.
The total U.S. rotary rig count for the week ending October 24 increased by 9 units to 1,927 units from the previous week, according to data from Baker Hughes Inc. The natural gas rig count increased by 4 to 332 units, while oil rigs increased by 5 to 1,595 units. Natural gas rigs are 44 units below year-ago levels, while oil rig counts are 238 units greater than their levels last year.
The Mont Belvieu natural gas plant liquids composite price decreased by 3.4% to $8.13/MMBtu for the week of October 20-24. All other product prices also declined. The ethane price decreased 3.7%, while the prices of natural gasoline, propane, butane, and isobutane declined by 0.7%, 5.7%, 2.9%, and 1.5%, respectively.
Natural gas prices mixed across the country on cold weather forecasts. Spot prices in most markets declined in trading through Friday of the report week, as weather across most of the United States remained unseasonably warm. Outside of the Northeast, prices on Friday were on average 6% below the previous Wednesday (October 22), with prices in the Northeast lower by 20% than the start of the report week. With a forecast of a cold front moving into the eastern part of the country, prices gained some strength on Wednesday (October 29), particularly at the New England trading points. Despite modest increases in several regions at the end of the report week, the Henry Hub spot price decreased from $3.68/MMBtu last Wednesday to $3.56/MMBtu yesterday, while prices at other trading points in Texas and Louisiana also declined as compared with the previous Wednesday. Prices in the Midwest, Midcontinent, Rockies and West regions increased only slightly over the report week, with most locations registering a 1% to 3% increase.
Increased production drives supply gains. Total U.S. natural gas supply increased by 0.5% from the previous week, according to data from Bentek Energy, as gains in domestic production offset declines in pipeline imports. Dry natural gas production averaged 70.6 Bcf/d, 0.8% greater than last week and 7.4% greater than the same week last year. Net pipeline imports from Canada declined by 4%, led by a 2.8% decline in imports into the Midwest, offsetting an increase of 0.7% in imports to the West. LNG sendout remained at minimal levels.
Demand declines slightly. Total natural gas consumption declined by 0.8%, according to Bentek data, led by decreased consumption in the residential/commercial (1.9%) and industrial (0.8%) sectors. Consumption of natural gas for power generation increased modestly by 0.2%, driven by increases in Texas and the Southeast offsetting declines in the Midwest (13%), Pacific Northwest (14%), and the Rockies (6%). Exports to Mexico increased by 0.5% week-over-week, averaging 1.8 Bcf/d, but were 3.1% above the year-ago level. The first phase of Sierrita Pipeline began service this week with initial capacity of 163 MMcf/d, expanding to 0.8 Bcf/d by 2020. This pipeline, which runs between Tucson and the Mexican border at Sasabe, Arizona, will flow additional U.S. natural gas exports to northwestern Mexico.