Natural gas spot prices fall at most locations. After prices rose in trading last Thursday, with forecasts of warmer temperatures and a three-day holiday weekend, prices across the country fell on Friday. Outside of the Northeast, prices decreased, on average, 24¢/MMBtu in trading on Friday, and continued their decline during trading Tuesday, shedding an additional 14¢/MMBtu, before rebounding slightly yesterday. Henry Hub began the week at $3.13/MMBtu last Wednesday, increased 16¢/MMBtu in trading on Thursday and decreased 37¢/MMBtu over the following two days of trading. Henry Hub closed yesterday at $2.94/MMBtu.
Northeastern spot prices have seasonal volatility. Although price movements at most locations in the Northeast followed the same general pattern of prices at other locations during the report week, the daily changes in prices were more significant. With day-to-day swings that ranged from $2.80/MMBtu to -$5.92/MMBtu, prices at the Algonquin Citygate, delivering to Boston, ended the report week down by $3.05 to close at $7.75/MMBtu yesterday. Transco Zone 6 NY, delivering to New York City, fell by $1.40 over the report week, closing at $3.27/MMBtu yesterday, after daily price movements that exceeded $1/MMBtu on all but one day of the report week.
Marcellus-area prices remain low, despite modest increases.Nationally, the only spot price gains for the report week occurred at pricing points in the Marcellus region in the Northeast. However, within that region, price movements were mixed, with changes varying from a slight decline to a 10¢/MMBtu increase. Prices at the Transco-Leidy Line in Pennsylvania increased by 14¢ over the report week, closing yesterday at $1.15/MMBtu. Tennessee Zone 4 Marcellus remained flat Wednesday-to-Wednesday, closing at $1.15/MMBtu yesterday. After gains last week, the Dominion South point fell, with prices at that location dropping 7¢ to close at $1.57/MMBtu yesterday.
Nymex February contract price ends report week below $3/MMBtu.Despite expectations of a storage withdrawal that will exceed 200 Bcf, the Nymex February 2015 contract closed the week below $3/MMBtu. The contract fell Wednesday-to-Wednesday, beginning the report week at $3.233/MMBtu last Wednesday and ending at $2.974/MMBtu yesterday. The 12-month strip, which averages the February 2015 through January 2016 contracts, also closed yesterday below $3/MMBtu, at $2.979/MMBtu.
Demand tumbles to 2015 low. With milder weather, U.S. natural gas consumption fell 21%, hitting a 2015 low of 80 Bcf/d on Sunday, January 18, with consumption across all sectors decreasing, according to data from Bentek Energy. Led by a 29% week-over-week decrease in the residential/commercial sector, U.S. consumption for the report week was also 6% lower than year-ago levels. Natural gas burned in the electric sector (power burn) fell 17% for the report week, but was 5% higher than this week last year. With the exception of the Rockies, power burn fell this week in all regions, and the greatest declines occurred in the Midcontinent and Midwest. Although power burn declined this week, for the month of January, power burn is on track to be at record levels. Exports to Mexico were also down for the week, falling 7%.
Despite gains in production, supply falls for the week. Rebounding from freeze-offs last week, dry gas production increased by 2% over the report week, according to data from Bentek Energy. The lower consumption during the report week reduced the demand for imports of natural gas from Canada, as well as LNG sendout. Imports from Canada fell by 16%, driven by declines of imports to the Midwest and Northeast. LNG sendout, which was elevated last week, dropped by 71%. Nearly all of the LNG sendout for the week came from the Everett terminal, near Boston, Massachusetts.