Price changes are small. Spot prices rose at most trading locations by 5% or less, and prices at most locations remained below the Henry Hub. The report week started out with above-average temperatures in the southern half of the country. While temperatures began to moderate in most locations by Friday, temperatures in Texas remained above average for the entire period, though the high temperatures seen in Texas do not appear to have influenced regional prices significantly. The Henry Hub spot price rose from $2.86/MMBtu last Wednesday to close at $2.91/MMBtu yesterday, after dropping to a weekly low of $2.76/MMBtu on Thursday.
Prices at the Chicago Citygate were above Henry Hub, starting the report week at $2.94/MMBtu and closing yesterday at $2.98. A force majeure on Canada's Alliance Pipeline, which runs from western Canada to Chicago, had limited effect on Chicago prices because of the availability of alternate supplies. Natural gas containing poisonous hydrogen sulfide was mistakenly injected into the Alliance Pipeline, which resulted in the shut-in of all flows at the end of last week. The closure limited flows to the Vector Pipeline in the Great Lakes area, which reduced natural gas exports to eastern Canada from the United States through St. Clair by 0.5 Bcf/d, according to Bentek Energy. Price at the St. Clair Hub in Michigan, the pricing point for internationally traded gas between the United States and Canada, started the week last Wednesday at $2.99/MMBtu and closed at $3.06/MMBtu yesterday. Alliance returned to service today, August 13.
Northeast prices increase moderately through the week. With mild temperatures, northeastern spot prices began the report period lower than most. Many key trading points started the week at $1.75/MMBtu or less, then rose through the week by up to 60% as temperatures warmed. At the Algonquin Citygate, which serves Boston, the spot price started the report period at $1.43/MMBtu, then rose to close at $2.38/MMBtu yesterday. Similarly, at Transcontinental Pipeline's Zone 6 trading point, which serves New York City, prices began at $1.75/MMBtu last Wednesday, rising to $2.74/MMBtu yesterday. And in the Mid-Atlantic, at Texas Eastern M3, prices started last Wednesday at $1.37/MMBtu and rose to end the report period at $1.67/MMBtu yesterday.
Marcellus prices rise, but remain low. Marcellus-area prices, among the lowest in the country, rose this week. At Tennessee Pipeline's Zone 4 Marcellus trading area, prices rose 10%, from $1.16/MMBtu to $1.28/MMBtu Wednesday to Wednesday. At Transco's Leidy Line, prices also rose, though slightly, from $1.26/MMBtu to $1.28/MMBtu. Dominion South demonstrated more upward growth than other Marcellus trading points by rising 23%. Prices rose from last Wednesday's starting price of $1.27/MMBtu to close yesterday at $1.56/MMBtu.
Nymex prices rise. The price for the September futures contract started this past Wednesday at $2.798/MMBtu, then rose through the report week to settle at $2.931/MMBtu yesterday. The 12-month strip (the average of the 12 contracts between September 2015 and August 2016) rose from $3.001/MMBtu last Wednesday to $3.104/MMBtu yesterday.
Supply falls slightly. Total supply fell 2% week over week, but was up 4% over the same period last year. Dry natural gas production averaged 72 Bcf/d, down by 0.4% from last week, even though Northeast production recorded an all-time high of 20 Bcf/d on August 6, according to Bentek Energy. Production during the report week was up year-over-year by 4%. The Northeastern region of the United States was a net exporter of natural gas to Canada for this reporting period. U.S. imports of Canadian gas decreased in all regions, with week-over-week imports from Canada down 16.8%. LNG sendout was down 4.6% over last week, and remains a minor contributor to supply.
Consumption drops moderately. U.S. consumption fell by 3% overall, compared to the last report week. The industrial sector gained 0.4% for the week, while the power and residential/commercial sectors declined by 5% and 2%, respectively. Power burn, which started the week at 33.4 Bcf/d, dropped to stay below 33 Bcf/d from Friday to Sunday, and then rose to 34.1 Bcf/d on Monday, the report week's high. Overall, power burn was down 5% week-over-week, with only the Southeast remaining above the previous week, by 1%. U.S. natural gas exports to Mexico were up 19% over the same period in 2014, though down 6% from last week.