Prices across most U.S. regions increased week-over-week.The largest increase in prices occurred in the Northeast, as continued cold temperatures and snow accumulation were setting records, particularly in the New England states. Prices were elevated at most trading hubs with the exception of the Midwest, where prices originally spiked on Wednesday last week and then moderated by the end of the report week. Friday, February 20, saw a significant decline in prices in the East, Northeast, and Midwest as power loads eased and temperatures moderated, but prices increased again by the end of the report week as the new cold weather system moved into most areas east of the Rockies. Prices at Henry Hub increased, from $2.93/MMBtu to $3.19/MMBtu, reflecting higher demand in the Southeast.
Prices in the Northeast remain at seasonal highs as cold spell continues. As the cold spell continued in the Northeast with more snow and record low temperatures, natural gas spot prices hit new seasonal highs, although these levels remained below record price spikes of last year. Prices at the New England trading hubs remained volatile amid choppy trading, starting last Wednesday around $20/MMBtu, declining by almost 50% by Friday, rising back to hit seasonal records on Tuesday, then moderating slightly yesterday. For example, prices at the Algonquin Citygate serving Boston area consumers began the report week at $21.37/MMBtu, declined to $13.53/MMBtu by Friday, hit a seasonal record at $29.99/MMBtu on Tuesday and closed at $25.42/MMBtu yesterday. Similarly, at Tennessee Zone 6 200 Line, which includes all points in Rhode Island, Massachusetts, and New Hampshire, prices declined by almost 50% to $10.98/MMBtu on Friday, before rebounding to $25.44/MMBtu yesterday.
Prices at the other northeastern trading hubs also showed considerable volatility and remained high as the cold spell continued, even as new storm system was expected to move into the region today.At Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, prices spiked to $38.15/MMBtu last Wednesday, then steadily declined in the next few days to reach $13.83/MMBtu by Tuesday, and closed the report week at $23.36/MMBtu. At Texas Eastern Transmission's M-3 trading point, which serves Mid-Atlantic customers in New Jersey and Pennsylvania, prices started the report week at $19.95/MMBtu, then fell to $10.02/MMBtu by Tuesday, and settled at $19.32/MMBtu yesterday.
Marcellus-area prices are mixed and remain low. Most Marcellus-area prices declined during the report week, and remained far below the rest of the country. Prices at Tennessee's Zone 4 trading region, which represents Marcellus deliveries on Tennessee's system, remained unchanged at $1.50/MMBtu. Prices at Dominion South, which serves customers in portions of Pennsylvania, Ohio, Maryland, West Virginia, and Virginia rose briefly on Monday to $3.16/MMBtu, but declined by Wednesday to $2.87/MMBtu. At the Leidy Hub, which represents deliveries into several pipeline systems in the upper west-central portion of Pennsylvania, prices declined from $1.63/MMBtu last Wednesday to $1.58/MMBtu yesterday.
Prices in the Midwest moderate. Severe winter weather that swept into the Midwest in the previous week led to price spikes at all trading hubs in the region by the middle of last week. Prices at Chicago Citygate hit $11.51/MMBtu last Wednesday, a seasonal high this winter, moderating to $6.81/MMBtu by Friday, and then declining further in the next few days to close the week at $4.62/MMBtu. Prices at other trading hubs followed a similar pattern, spiking last Wednesday and then declining by 50%-60%, with the Midwest regional average closing yesterday at $4.84/MMBtu, down $6.35/MMBtu over the report week.
Nymex March contract price remains below $3/MMBtu. Despite expectations of a large storage withdrawal, the Nymex March 2015 contract closed the week below $3/MMBtu. The contract began the report week at $2.831/MMBtu last Wednesday and increased slightly to close the report week yesterday at $2.894/MMBtu, when March expired as the prompt month contract. The April contract on Wednesday settled lower than March at $2.862. April became the prompt month contract today. The 12-month strip, which averages the March 2015 through February 2016 contracts, remained essentially unchanged, starting the report week at $2.949/MMBtu and closing yesterday at $2.952/MMBtu.
Demand remains at high levels. U.S. natural gas consumption averaged 111.6 Bcf/d for the report week, peaking on Thursday at 125.7 Bcf/d, according to data from Bentek Energy. The residential/commercial sector led the growth in demand, increasing by 1.6% week-over-week and averaging 61.6 Bcf/d, 57% higher than in the same week of last year. Gas consumption in the electric sector increased by 0.1%, while industrial consumption registered a slight decline of 0.5% compared to the previous week. Exports to Mexico were also elevated, up 10% to average 2.5 Bcf/d.
U.S. dry gas production declines slightly during the report week. Total supply averaged 78.4 Bcf/d, a 1.9% decline over the previous week, and was 10% higher than a year-ago level, according to data from Bentek Energy. Dry gas production fell by 1.6% over the report week, and averaged 72 Bcf/d. Some of the declines in supply were due to freeze-offs in Ohio and Pennsylvania. Production also decreased in Southeast/Gulf region, where supply averaged 15.1 Bcf/d, 3.5% below the previous week. This may also be attributed to freeze-offs, although there were no direct reports of them occurring in that region. Imports of natural gas from Canada decreased this week, averaging 6.0 Bcf/d over the report period, led by declines in the Northeast and West. LNG sendout also decreased by 25% and averaged 0.8 Bcf/d.