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NATURAL GAS WEEKLY UPDATE (week ending 05-18-18)

In the News (EIA):

 

Reduced natural gas infrastructure capacity may pose summer energy reliability challenges in Southern California:

Separate studies released during the past few weeks by the Southern California Gas Company (SoCalGas) and Aliso Canyon Technical Assessment Group (the Assessment Group), which includes the California Public Utility Commission, the California Energy Commission, the California Independent System Operator, and the Los Angeles Department of Water and Power, highlight potential electricity reliability concerns for the upcoming summer that have implications for the upcoming winter. Presented on May 7, these concerns mostly stem from limited availability of natural gas pipeline receipt capacity and continuing restrictions affecting SoCalGas storage operations. The Assessment Group concluded that base case total system deliverability capacity—a combination of both natural gas pipeline system and non-Aliso storage working gas deliverability capacity—is a little less than 3.6 Bcf/d this summer, or 200 million cubic feet per day (MMcf/d) lower than last summer. If natural gas demand exceeded 3.6 Bcf/d—which occurred only once between 2013 and 2017, on August 28, 2017—it might require curtailing natural gas deliveries to electric generators. Since October 2017, SoCalGas has experienced a series of planned and unplanned natural gas pipeline outages that have reduced the ability to bring natural gas into Southern California. According to the May 7, 2018 SoCalGas maintenance schedule, pipeline repairs are not expected to be completed until the end of summer, with key pipelines—Lines 4000, 235-2, and 2000—showing no estimated end date for work to be completed. Pipeline receipt capacity for summer 2018 is down about 530 MMcf/d from summer 2017. Natural gas inventories in Southern California are also typically refilled over the course of the summer months. However, this period also corresponds with peak electricity demand for cooling, and natural gas is a key fuel source for electric power generation in Southern California. According to SoCalGas, the current outages will create challenges this summer for meeting customer demand while also refilling storage inventories. SoCalGas’s ability to refill storage will depend on temperatures this summer. Currently, the National Oceanic and Atmospheric Administration (NOAA) forecasts a warmer-than-normal summer (June/July/August) in Southern California. The profile of refilling natural gas at SoCalGas’ storage fields has changed since a leak at Aliso Canyon storage complex was discovered in October 2015. After the Aliso Canyon well failure, the total capacity of the four storage facilities in the SoCalGas service territory has declined to 74 Bcf (of which Aliso Canyon has capacity of 24.6 Bcf) from 135.6 Bcf previously. Working gas inventories as of May 14, 2018, totaled 51.5 Bcf, which is low by historical standards, but 9.5 Bcf higher than at this time in 2017 and 8 Bcf lower than at this time in 2016. The Assessment Group’s report issued a series of recommendations to help Southern California address reliability challenges, including: importing liquefied natural gas (LNG) through the Otay Mesa receipt point at the San Diego–Mexico border, improving compliance with operational flow orders, expediting any pending electricity transmission upgrades, taking advantage of demand response pilot projects, and exploring an increase in the maximum target inventory at Aliso Canyon. EIA provides a daily summary of key energy conditions in Southern California on the Southern California Daily Energy Report. In addition to the daily summary, EIA provides occasional commentary and analysis on notable market conditions in Southern California.

Overview:

Natural gas spot prices rose at most locations this report week (Wednesday, May 9 to Wednesday, May 16). The Henry Hub spot price rose from $2.72 per million British thermal units (MMBtu) last Wednesday to $2.78/MMBtu yesterday. At the New York Mercantile Exchange (Nymex), the June 2018 contract price rose 8¢ from $2.737/MMBtu last Wednesday to $2.815/MMBtu yesterday. Net injections to working gas totaled 106 billion cubic feet (Bcf) for the week ending May 11. Working natural gas stocks are 1,538 Bcf, which is 35% lower than the year-ago level and 25% lower than the five-year (2013–17) average for this week. The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 25¢, averaging $8.24/MMBtu for the week ending May 16. The price of ethane fell by 3%, while the prices of natural gasoline, propane, butane, and isobutane rose by 1%, 2%, 4%, and 18%, respectively. According to Baker Hughes, for the week ending Tuesday, May 8, the natural gas rig count increased by 3 to 199. The number of oil-directed rigs rose by 10 to 844. The total rig count increased by 13, and it now stands at 1,045.

Prices/Supply/Demand:

Henry Hub prices rise with warmer weather across the southern United States. This report week (Wednesday, May 9 to Wednesday, May 16), the Henry Hub spot price rose 6¢ from $2.72/MMBtu last Wednesday to $2.78/MMBtu yesterday, the prices for delivery on last Thursday and today, respectively. Average temperatures across most of the southern United States are generally expected to be warmer today than last Thursday, ranging from 5°F (degrees Fahrenheit)–20°F higher today than last Thursday. Average temperatures for the week are expected to reach more than 75°F in parts of Texas and in the Southeast. Prices at key Midwest trading hub increase Wednesday over Wednesday. At the Chicago Citygate, prices increased 7¢ from $2.41/MMBtu last Wednesday to $2.48/MMBtu yesterday. Despite the expectation of cooler temperatures today compared to last Thursday, most of the lower Midwest—including southern Illinois—are expected to have warmer average temperatures this report week compared with last report week, according to data from NOAA. California prices are mixed. Prices at PG&E Citygate in Northern California rose 13¢, up from $2.77/MMBtu last Wednesday to $2.90/MMBtu yesterday. PG&E—the operator of the primary natural gas distribution system in Northern California—also announced pipeline maintenance activity that is expected to reduce overall pipeline capacity on the distribution system through the end of May. The price at SoCal Citygate decreased 9¢ from $3.12/MMBtu last Wednesday to $3.03/MMBtu yesterday. Despite ongoing natural gas pipeline and storage limitations, which have reduced SoCalGas’s flexibility to meet natural gas demand (see In the News for this report week), overall natural gas consumption in Southern California for this report week decreased with moderate temperatures in coastal Southern California. Prices in New England rise amid ongoing capacity constraints. At the Algonquin Citygate, which serves Boston-area consumers, prices went up 13¢ from $2.27/MMBtu last Wednesday to $2.40/MMBtu yesterday. According to Algonquin Gas Transmission’s electronic bulletin board, a series of maintenance activities has decreased pipeline capacity in New England. In addition, natural gas deliveries from the Millennium pipeline to the Algonquin Gas Transmission pipeline system—a key pipeline for bringing natural gas into New England—fell sharply during this report week as the Millennium pipeline began maintenance and eastbound flow capacity was reduced from about 1 Bcf/d to 0.3 Bcf/d. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 37¢ from $2.69/MMBtu last Wednesday to $2.32/MMBtu yesterday. Appalachian spot prices trade $0.60 to $2.00 lower than Henry Hub. Tennessee Zone 4 Marcellus spot prices decreased 95¢ from $1.72/MMBtu last Wednesday to $0.77/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania rose 8¢ from $2.11/MMBtu last Wednesday to $2.19/MMBtu yesterday. Overall supply is flat week over week. According to data from PointLogic Energy, the average total supply of natural gas remained the same as in the previous report week, averaging 85.6 Bcf/d. Dry natural gas production decreased by 1% compared with the previous report week, largely because of Northeast production declines associated with takeaway capacity reductions from the Millennium pipeline maintenance. Average net imports from Canada increased by 1% from last week. Demand increases week over week as electric power sector consumption rises. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from PointLogic Energy. Natural gas consumed for power generation climbed by 8% week over week as average temperatures for the week rose higher than 75°F in parts Texas and the Southeast. Industrial sector consumption stayed constant, averaging 19.9 Bcf/d. In the residential and commercial sectors, consumption increased by 3% with much of the West and Northeast cooler this report week compared with last report week. Natural gas exports to Mexico were the same as last week, averaging 4.4 Bcf/d. U.S. liquefied natural gas (LNG) exports increase week over week. Seven LNG vessels (combined LNG-carrying capacity 25.8 Bcf) departed the United States from May 10 to May 16 (six tankers from Sabine Pass liquefaction terminal and one tanker from Cove Point). The first U.S. LNG cargo to Israel is en route to Hadera Gateway regasification terminal and is carried on LNG tanker British Diamond, scheduled to arrive in Israel on May 27, according to the shipping data compiled by Bloomberg.

Storage:

Net injections top the 100 Bcf threshold in May for the first time since 2015. Net injections into storage totaled 106 Bcf for the week ending May 11, compared with the five-year (2013–17) average net injection of 87 Bcf and last year’s net injections of 64 Bcf during the same week. This report week had the largest reported May weekly net injection since May 29, 2015, when net injection reached its record high of 132 Bcf. Net injections during the week averaged 15.1 Bcf/day; net injections will have to average 13.1 Bcf/day for the remainder of the refill season to match the five-year average level (3,806 Bcf) by October 31. Working gas stocks totaled 1,538 Bcf, which is 501 Bcf lower than the five-year average and 821 Bcf lower than last year at this time. Despite low storage inventories, the average January 2019 futures contract price trades at a smaller premium to the average spot price than last year at this time. During the most recent storage week, the average natural gas spot price at the Henry Hub averaged $2.71/MMBtu, and the Nymex futures price of natural gas for delivery in January 2019 averaged $3.00/MMBtu, 29¢/MMBtu higher than the spot price. A year ago, the January contract was 54¢/MMBtu higher than the spot price. These pricing patterns reflect the relative economics supporting injections into working gas storage. Reported net injection into storage is close to the median of analysts’ expections. According to the Desk survey of natural gas analysts, estimates of the weekly net change from working natural gas storage ranged from net injections of 99 Bcf to 110 Bcf, with a median estimate of 104 Bcf. At the 10:30 a.m. release of the Weekly Natural Gas Storage Report (WNGSR), 299 trades were executed, decreasing the Nymex price for June delivery less than 1¢/MMBtu to $2.79/MMBtu. Several seconds after the release, trading activity increased with 1,075 trades during a one-second span as prices recovered, averaging $2.80/MMBtu. Temperatures are in the normal range for the storage week. Temperatures in the Lower 48 states averaged 64 °F, 4°F higher than normal and 6°F higher than last year at this time. Tempertures were 6°F warmer on average than the previous report week.

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CRUDE OIL WEEKLY UPDATE (week ending 05-18-18)

Summary (EIA):

U.S. crude oil refinery inputs averaged over 16.6 million barrels per day during the week ending May 11, 2018, 149,000 barrels per day more than the previous week’s average. Refineries operated at 91.1% of their operable capacity last week. Gasoline production increased last week, averaging about 10.5 million barrels per day. Distillate fuel production increased last week, averaging over 5.0 million barrels per day. U.S. crude oil imports averaged 7.6 million barrels per day last week, up by 278 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 8.0 million barrels per day, 4.3% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 721,000 barrels per day. Distillate fuel imports averaged 77,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.4 million barrels from the previous week. At 432.4 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 3.8 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories increased, while blending components inventories decreased last week. Distillate fuel inventories decreased by 0.1 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories increased by 1.7 million barrels last week, and are in the lower half of the average range. Total commercial petroleum inventories decreased by 0.7 million barrels last week. Total products supplied over the last four-week period averaged about 20.1 million barrels per day, up by 1.5% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.4 million barrels per day, up by 0.7% from the same period last year. Distillate fuel product supplied averaged about 4.2 million barrels per day over the last four weeks, up by 3.0% from the same period last year. Jet fuel product supplied is down 5.6% compared to the same fourweek period last year. The WTI price was $70.69 per barrel on May 11, 2018, $0.98 above last week’s price and $22.86 over a year ago. The spot price for conventional gasoline in the New York Harbor was $2.136 per gallon, $0.068 less than last week’s price and $0.608 lower than a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $2.239 per gallon, $0.066 over last week’s price and $0.750 above a year ago. The U.S. average regular gasoline retail price for May 14, 2018, was $2.873 per gallon. Please note that on May 14, 2018, EIA implemented new statistical methodologies for conducting the Motor Gasoline Price Survey. Because of these changes, the published price estimates this week are not directly comparable to those published for May 7, 2018, which were based on EIA’s previous sample. The national average retail diesel fuel price increased for the eighth week in a row to $3.239 per gallon, $0.068 per gallon above last week and $0.695 over a year ago.

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CRUDE OIL WEEKLY UPDATE (week ending 05-11-18)

Summary (EIA):

U.S. crude oil refinery inputs averaged about 16.5 million barrels per day during the week ending May 4, 2018, 75,000 barrels per day less than the previous week’s average. Refineries operated at 90.4% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.9 million barrels per day. Distillate fuel production remained virtually unchanged last week, averaging 5.0 million barrels per day. U.S. crude oil imports averaged over 7.3 million barrels per day last week, down by 1,226 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 8.1 million barrels per day, 1.0% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 803,000 barrels per day. Distillate fuel imports averaged 128,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.2 million barrels from the previous week. At 433.8 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 2.2 million barrels last week, and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 3.8 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories increased by 2.3 million barrels last week, and are in the lower half of the average range. Total commercial petroleum inventories decreased by 1.5 million barrels last week. Total products supplied over the last four-week period averaged about 20.3 million barrels per day, up by 2.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.5 million barrels per day, up by 2.2% from the same period last year. Distillate fuel product supplied averaged over 4.2 million barrels per day over the last four weeks, up by 4.1% from the same period last year. Jet fuel product supplied is down 1.5% compared to the same fourweek period last year. The WTI price was $69.71 per barrel on May 4, 2018, $1.60 above last week’s price and $23.48 over a year ago. The spot price for conventional gasoline in the New York Harbor was $2.068 per gallon, $0.013 less than last week’s price but $0.616 higher than a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $2.845 per gallon, $0.018 over last week’s price and $0.728 above a year ago. The national average retail regular gasoline price increased to $2.845 per gallon on May 7, 2018, $0.001 lower than last week’s price but $0.473 more than a year ago. The national average retail diesel fuel price increased for the seventh week in a row to $3.171 per gallon, $0.014 per gallon above last week and $0.606 over a year ago.

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NATURAL GAS WEEKLY UPDATE (week ending 05-11-18)

In the News (EIA):

 

Natural gas sold at negative prices on TransCanada’s Alberta System:

The average spot price for deliveries at Western Canada’s AECO C price point declined to US -$0.01 per million British thermal unit (MMBtu) on Friday, May 4, according to price data from Natural Gas Intelligence (NGI). AECO C is a virtual trading point that includes all trades on TransCanada’s Alberta pipeline system (also known as the NOVA system). The pipeline system transports natural gas produced in Alberta and British Columbia to demand markets in eastern Canada and the United States. This report week is the first time NGI has reported a negative daily volume-weighted average spot price at AECO C, though the average spot price was $0.00/MMBtu on October 6, 2017.

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CRUDE OIL WEEKLY UPDATE (week ending 05-04-18)

Summary (EIA):

U.S. crude oil refinery inputs averaged about 16.6 million barrels per day during the week ending April 27, 2018, 60,000 barrels per day less than the previous week’s average. Refineries operated at 91.1% of their operable capacity last week. Gasoline production increased last week, averaging over 10.0 million barrels per day. Distillate fuel production remained virtually unchanged last week, averaging 5.0 million barrels per day. U.S. crude oil imports averaged over 8.5 million barrels per day last week, up by 80,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.4 million barrels per day, 2.2% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 923,000 barrels per day. Distillate fuel imports averaged 76,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels from the previous week. At 436.0 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories increased by 1.2 million barrels last week, and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 3.9 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories increased by 0.7 million barrels last week, and are in the lower half of the average range. Total commercial petroleum inventories increased by 5.4 million barrels last week. Total products supplied over the last four-week period averaged about 20.1 million barrels per day, up by 2.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.3 million barrels per day, up by 1.2% from the same period last year. Distillate fuel product supplied averaged about 4.2 million barrels per day over the last four weeks, up by 0.1% from the same period last year. Jet fuel product supplied is up 1.7% compared to the same four-week period last year. The WTI price was $68.11 per barrel on April 27, 2018, $0.15 below last week’s price but $18.80 over a year ago. The spot price for conventional gasoline in the New York Harbor was $2.081 per gallon, $0.014 more than last week’s price and $0.597 higher than a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $2.155 per gallon, $0.029 over last week’s price and $0.653 above a year ago. The national average retail regular gasoline price increased to $2.846 per gallon on April 30, 2018, $0.048 higher than last week’s price and $0.435 more than a year ago. The national average retail diesel fuel price increased for the sixth week in a row to $3.157 per gallon, $0.024 per gallon above last week and $0.574 over a year ago.

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NATURAL GAS WEEKLY UPDATE (week ending 05-04-18)

In the News (EIA):

 

Global LNG trade increases by a record 10% in 2017:

Global trade in liquefied natural gas (LNG) increased by 3.5 billion cubic feet per day (Bcf/d) to 38.2 Bcf/d in 2017, a 10% increase from 2016 and the largest annual increase in the history of LNG trade, according to the recently released 2018 Annual Report on LNG trade by the International Group of Liquefied Natural Gas Importers (GIIGNL). In 2017, there were 19 LNG-exporting countries and 40 LNG-importing countries. Malta became the newest country to begin LNG imports in 2017. Strong growth in LNG trade was supported by new liquefaction capacity commissioned in Australia, the United States, and Russia, which collectively added five new liquefaction trains (combined 3.4 Bcf/d capacity). The world’s first floating liquefaction plant, Malaysia’s PFLNG Satu (0.2 Bcf/d capacity), was also commissioned in 2017. LNG exports from Australia and the United States accounted for more than three-quarters (2.7 Bcf/d) of the increase in global LNG exports in 2017 compared to 2016. Read more

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NATURAL GAS WEEKLY UPDATE (week ending 04-27-18)

In the News (EIA):

 

FERC authorizes Rover Pipeline, LLC to place additional facilities partially in service:

On April 25, 2018, the Federal Energy Regulatory Commission (FERC) approved a portion of Rover Pipeline, LLC’s (Rover) April 13 request to place key facilities associated with Phase 2 of the Rover pipeline project into service. In addition to compressor station and mainline facilities, the filing also requested permission to place the Vector meter station in Livingston County, Michigan, into service, as well as the new pipeline market segment connecting that meter station to the Defiance, Ohio, compressor station. While FERC granted approval to Rover to commence service of Read more

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CRUDE OIL WEEKLY UPDATE (week ending 04-27-18)

Summary (EIA):

U.S. crude oil refinery inputs averaged over 16.6 million barrels per day during the week ending April 20, 2018, 328,000 barrels per day less than the previous week’s average. Refineries operated at 90.8% of their operable capacity last week. Gasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production decreased last week, averaging 5.0 million barrels per day. U.S. crude oil imports averaged about 8.5 million barrels per day last week, up by 539,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.2 million barrels per day, Read more

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NATURAL GAS WEEKLY UPDATE (week ending 04-20-18)

In the News (EIA):

 

Exelon to purchase Everett LNG terminal to ensure supply to Mystic Generating Station:

On March 29, Exelon Generation announced an agreement with ENGIE North America to purchase the Everett liquefied natural gas (LNG) import terminal by the fourth quarter of 2018, pending regulatory approvals, to secure fuel for the Mystic Generating Station in Everett, Massachusetts. ENGIE, a French multinational electric utility company, has divested many of its fossil fuel investments and its entire LNG portfolio as it plans to increase the share of renewables in its portfolio.

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CRUDE OIL WEEKLY UPDATE (week ending 04-20-18)

Summary (EIA):

U.S. crude oil refinery inputs averaged over 16.9 million barrels per day during the week ending April 13, 2018, 70,000 barrels per day less than the previous week’s average. Refineries operated at 92.4% of their operable capacity last week. Gasoline production increased last week, averaging 10.2 million barrels per day. Distillate fuel production decreased last week, averaging 5.1 million barrels per day. U.S. crude oil imports averaged over 7.9 million barrels per day last week, down by 720,000 barrels per day from the previous week.

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