Natural gas prices flat, or down slightly, at most locations. The weather generally remained warmer than average through the report week, as much as 4° Fahrenheit above normal. The warmest temperatures were felt from Texas up through the Midwest, with heat and humidity moving east through the report week. Outside of the Northeast, trading locations generally stayed within 5% of their starting point (Wednesday to Wednesday), with most dipping slightly for the weekend. The Henry Hub spot price started the report period at $2.89/MMBtu, fell to $2.81/MMBtu on Friday, and then returned to $2.90/MMBtu to end the week up 1¢ yesterday. Prices at most locations followed this pattern. In California PG&E Citygate, serving Northern California, started off at $3.27/MMBtu on Wednesday, July 22, fell 10¢ to $2.17/MMBtu on Friday, then rose back to $3.27 to close the week. Chicago Citygate, opened on July 22 at $2.93/MMBtu, dipped by 7¢ on Friday, then regained its position to close up slightly at $2.94/MMBtu yesterday.
Northeast prices down to start, but rise through the week with increasing temperatures. Northeast temperatures started the week below average by 4°, but rose through the report week to peak above average by 6°, or more, on Wednesday. While Northeast prices started lower than most, they began to rise on Monday, more than doubling from their starting prices in response to 90° temperatures at several trading locations. At Algonquin Citygate, serving Boston, prices started last Wednesday at $1.74/MMBtu, fell 20% to $1.39 on Friday while moderate temperatures held, but more than doubled on Monday to $4.12/MMBtu, as northeastern temperatures rose. As temperatures returned to normal, Algonquin Citygate fell to settle at $3.34/MMBtu yesterday.
Tennessee Zone 6 200L, supplying lower New England, followed Algonquin's rise with a similar price pattern, though not as high. It began the week at $1.73/MMBtu, peaking at $3.69 on Tuesday, to close at $3.19/MMBtu yesterday. New York City, supplied by Transcontinental Gas Pipeline Zone 6, followed Algonquin as well, nearly doubling; it opened at $1.58/MMBtu and ended the week at $3.01 yesterday.
Marcellus-area prices remain low. Marcellus-area prices increased again this week, following the heat, but still remain low. Prices at Tennessee Zone 4 Marcellus started at $1.15/MMBtu last Wednesday, rose to peak on Monday at $1.32, then fell to close yesterday at $1.24. On the Transcontinental Leidy Line, prices began last Wednesday at $1.18/MMBtu, peaked at $1.50 on Monday, and finished the report week at $1.34/MMBtu yesterday. Dominion South was nearly a carbon copy of the Leidy Line, opening at $1.19/MMBtu, bumping up to $1.52, and settling on Wednesday at $1.37/MMBtu.
Nymex prices increase. At the New York Mercantile Exchange (Nymex), the August near-month contract began the week at $2.897/MMBtu last Wednesday and settled at $2.886/MMBtu on July 29, when it expired. The September contract started the report week at $2.908/MMBtu last Wednesday, falling 4¢ to end the report week at $2.864/MMBtu yesterday; it became the prompt month contract today. The 12-month strip (the average of the September 2015 through August 2016 futures contracts) decreased from $3.130/MMBtu last Wednesday to $3.092/MMBtu yesterday.
Supply increases slightly. Dry natural gas production averaged 72.1 Bcf/d for the report period, a week-over-week increase of 0.3%, according to data from Bentek Energy, and a 4.8% increase over the same period last year. Imports from Canada were generally flat this week, only 0.1% above last week, but were 15.6% above U.S. imports from Canada for the same period last year. LNG sendout, a minor contributor to supply, was down by 3.3% for the week.
Demand continues to increase, driven by the power sector. U.S. natural gas consumption was up by 0.5% this week. Though temperatures starting the week were slightly below average, the summer heat returned midweek moving average temperatures up by as much as 4°, resulting in increased consumption for power generation by 1.4% for the week. Nationally, July's power burn averaged 32.5 Bcf/d, 20% higher than in July 2014. The high temperatures seen from coast-to-coast on Tuesday, July 28, and Wednesday, July 29, set power burn records of 37.9 Bcf/d and 38.4 Bcf/d, respectively, as noted by Bentek Energy. These power burn records exceeded previous highs set in July 2012. The increased power burn levels for the report week were driven largely by consumption in the Midwest, Texas, and the Midcontinent with 21.4%, 6.1%, and 4.1% increases, respectively, with the Northeast and Southeast increasing power burn during the second half of the week. Only the Pacific Northwest and Southwest saw decreasing power burn for the week. Industrial and residential/commercial sectors saw decreased consumption, with both down 0.4% for the week. Exports to Mexico decreased 1.8% week over week, but were 27.3% above 2014 levels.