Prices rise on hotter weather and flat supply. Natural gas prices increased in all spot market locations this report period, led by hotter weather, which drove up demand in the electric-power sector, and flat supply. The Henry Hub spot price began the week at $2.64/MMBtu and settled yesterday at $2.92/MMBtu. Prices at most trading locations rose by 25¢ to 40¢/MMBtu. The Chicago Citygate price rose by 27¢ to close at $2.85/MMBtu yesterday. The PG&E Citygate price, which serves Northern California, similarly rose by 27¢, closing at $3.25/MMBtu yesterday.
Northeast prices jump sharply. The biggest absolute and percentage spot price increases occurred in the Northeast, where some prices rose by more than $1.00 and some doubled or nearly doubled. It is worth noting that price points in the region generally began the report period depressed, with a few of them closing below $1.00/MMBtu last week. Most of the price increases came Tuesday and yesterday on the arrival of higher temperatures. The Algonquin Citygate price, serving Boston, increased by $1.83 over the week, and closed at $3.13/MMBtu yesterday. Marcellus prices strengthened as well. Tennessee Zone 4 Marcellus rose by 28¢, closing at $1.26/MMBtu yesterday. Some traders also cited forecasts of moderating productivity as a driver of prices.
Nymex prices rise. At the New York Mercantile Exchange (Nymex), the July contract began the week at $2.634/MMBtu and rose by more than a quarter to close at $2.891/MMBtu yesterday. The 12-month strip, which averages the July 2015 through June 2016 Nymex prices, closed at $3.112/MMBtu yesterday, about 19¢ above the Henry Hub spot price that day.
Most natural gas liquids prices rise sharply. The natural gas plant liquids composite price at Mont Belvieu, Texas, rose sharply, returning to levels similar to two weeks ago. Possibly because of flooding in Texas, last week's Mont Belvieu NGL spot prices fell significantly, with the exception of ethane, which remained relatively flat. NGL prices have been low in recent months because of a combination of factors: high production, high storage levels, slack in export markets, and low crude oil prices.
Supply and production are flat this week. Dry gas production was essentially flat this week, rising by 0.1% and averaging 72.0 Bcf/d, according to Bentek Energy data, about 5.9% higher than last year's levels. Imports of natural gas from Canada rose by 2.4%, with receipts in the West and Midwest increasing, and receipts in the Northeast decreasing. Overall supply increased by just 0.2%.
Demand continues to increase, led by power generation. Overall U.S. gas consumption increased by 3.1% this week, with large increases in power-sector demand offsetting continued declines in other sectors. Power burn increased in almost all regions, with generators in the Midcontinent region consuming 76.9% more natural gas this week than last week, and Texas consuming 23.3% more. The Northeast was the only region showing a week-on-week decline, falling by 1.4%. U.S. residential/commercial demand fell by 9.5%, and industrial demand was relatively flat, falling by 0.7%. Exports to Mexico decreased by 3.2%.