Prices rise as temperatures fall. During the report week, temperatures in the eastern half of the United States dropped to their coldest yet for this winter. After falling from $2.85/MMBtu at the start of the report week to $2.73/MMBtu on Friday, prices at the Henry Hub rose 22¢on Tuesday, with the approaching cold weather. The Henry Hub spot price ended the week at $2.93/MMBtu yesterday. Despite the Wednesday to Wednesday increase, Henry Hub prices, supported by production that is 11.6% above the same time last year, remain relatively low, even with forecasts for continuing cold weather. Prices increased on Wednesday in the Midwest, with high temperatures forecast in the single digits for Thursday. Driven by an increase of $7.57/MMBtu on Wednesday, Chicago Citygate more than tripled in price Wednesday to Wednesday, starting at $3.14/MMBtu and moving up to $11.51/MMBtu yesterday.
Northeast and Mid-Atlantic see new seasonal high prices. The Northeast and the Mid-Atlantic trading hubs started the week cold and got colder. Prices at trading locations serving these major market areas started the report week at seasonal highs that were surpassed during the report week. At the Algonquin Citygate, serving Boston, prices began the week at $19.27/MMBtu, then headed up to $23.51/MMBtu for the weekend, settling yesterday at $21.37/MMBtu. At Transcontinental Pipeline Zone 6, the trading point for New York City, prices began the week at $15.22/MMBtu, rising to end the report week at $38.15/MMBtu, a new high for this winter.
The western half of the United States experienced moderate temperatures during the report week, which have contributed to lower-than-average storage withdrawals and prices that have remained comparatively stable. For example, prices at PG&E Citygate, serving Northern California, fell from $3.03/MMBtu to $2.96/MMBtu during the report week.
Marcellus-area prices fall slightly through the week. Marcellus-area prices fluctuated slightly through the week, closing down yesterday by 10¢ or less. Prices at Tennessee's Zone 4 Marcellus began the week at $1.61/MMBtu last Wednesday, fell to $1.27/MMBtu by Friday, February 13, then rose to settle at $1.50/MMBtu yesterday. At the Transcontinental Leidy Line, which represents deliveries into several pipeline systems in the upper west-central portion of Pennsylvania, prices started the week at $1.67/MMBtu last Wednesday, dipped 25¢ to $1.42/MMBtu on Friday, and then rose to $1.63/MMBtu at the end of the report week. Prices at Dominion South rose from $2.83/MMBtu last Wednesday to $3.03/MMBtu on Tuesday, but fell to close down yesterday at $2.82/MMBtu.
Nymex prices rise. Near-month Nymex prices fluctuated some during the report week, starting at $2.797/MMBtu last Wednesday and moving to $2.831/MMBtu yesterday. The price of the 12-month strip (the average of the 12 contracts between March 2015 and February 2016) rose from $2.910/MMBtu last Wednesday to $2.949/MMBtu yesterday.
Demand rises significantly for the week. With increases in all sectors, domestic consumption rose 23.1% this report week. Led by severe winter weather sweeping into the Midwest and pushing south and east, U.S. residential/commercial consumption rose 36.5% week over week, and consumption of natural gas for electric power generation (power burn) increased 14.5%. Despite decreased power burn in the Pacific Northwest, Rockies, and Southwest regions, all of the other regions, among them the largest power burn consumers, saw significant increases over the Wednesday to Wednesday report week. Industrial consumption of natural gas was 4.4% higher, while exports to Mexico fell 3% this week. Total demand was 21.3% more than this time last year.
Supply rises. Total natural gas supply rose 1.4%, driven by an 11.3% increase in imports from Canada over the previous week, and an increase in LNG sendout, which exceeded its weekly five-year (2010-14) average, the first time this has happened since March 2010. Although domestic production of dry natural gas fell slightly for the week, it remains more than 11.6% higher than this time last year with an average of more than 72.8 billion cubic feet per day (Bcf/d).