Henry Hub price reaches $3.00 for first time since March 2019:
On October 22, the natural gas spot price at the Henry Hub reached $3.00 per million British thermal units (MMBtu), its highest value since March 2019, according to Natural Gas Intelligence. Tightening natural gas supply and demand balances toward the end of October—driven by increasing liquefied natural gas (LNG) export demand and greater heating demand—have led the price at the Henry Hub to more than double in October from a low of $1.34/MMBtu on October 4. Increased demand for U.S LNG exports has put upward pressure on the price at Henry Hub. Following a summer of LNG cargo cancellations and hurricane-related disruptions, LNG feedgas demand has recovered to pre-COVID levels. According to IHS Markit, since late-August, LNG feedgas volumes have increased by more than 8.0 billion cubic feet per day (Bcf/d), rising from 2.3 Bcf/d in the aftermath of Hurricane Laura, which made landfall on August 27, to a record high 10.4 Bcf/d by the end of October. The increase in LNG exports reflects a higher spread between the natural gas spot price at the Henry Hub and the Japan/Korea Marker (JKM) price—S&P Global Platts’ published price for LNG spot cargoes delivered into Asian markets—which improves netbacks from LNG exports leaving the United States. Cooler-than-normal temperatures in the second half of October, particularly in the Great Plains and the Upper Midwest, have also contributed to tightening market conditions as a result of increases in natural gas heating demand. According to IHS Markit, combined residential and commercial natural gas consumption increased from a low of 8.3 Bcf/d on October 10 to about 27.0 Bcf/d by the end of October and averaged nearly 2.0 Bcf/d higher in October 2020 compared with October 2019. The recent increases in natural gas demand have accompanied steady declines in natural gas production in 2020 that resulted from low natural gas and oil prices. Dry natural gas production has declined 6.7 Bcf/d since the start of the year, falling to an average of 87.6 Bcf/d in October, according to IHS Markit. Mild temperatures in early November and a resulting decline in residential and commercial natural gas consumption have led to a slight pullback in the Henry Hub price in recent days. The Henry Hub price fell to as low as $2.59/MMBtu on November 9.
Natural gas spot prices rose at most locations this report week (Wednesday, November 4 to Wednesday, November 11). The Henry Hub spot price rose from $2.60 per million British thermal units (MMBtu) last Wednesday to $2.77/MMBtu yesterday. At the New York Mercantile Exchange (Nymex), the price of the December 2020 contract decreased 1¢, from $3.046/MMBtu last Wednesday to $3.031/MMBtu yesterday. The price of the 12-month strip averaging December 2020 through November 2021 futures contracts declined 1¢/MMBtu to $2.991/MMBtu. This bullet will be updated tomorrow November 13. The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 19¢/MMBtu, averaging $5.38/MMBtu for the week ending November 11. The price of ethane fell by 2%. The prices of propane, isobutane, natural gasoline, and butane rose by 4%, 5%, 6%, and 12%, respectively. According to Baker Hughes, for the week ending Tuesday, November 3, the natural gas rig count decreased by 1 to 71. The number of oil-directed rigs rose by 5 to 226. The total rig count increased by 4, and it now stands at 300.
Prices rise at most locations outside of California. This report week (Wednesday, November 4 to Wednesday, November 11), the Henry Hub spot price rose 17¢ from $2.60/MMBtu last Wednesday to a high of $2.77/MMBtu yesterday. Temperatures were cooler than normal west of the Rocky Mountains and much warmer than normal east of the Rockies, especially in the Midwest and Northeast. Prices rose toward the end of the week with forecasts of colder temperatures and higher heating demand. At the Chicago Citygate, the price increased 19¢ from $2.39/MMBtu last Wednesday to a high of $2.58/MMBtu yesterday amid cold temperatures and snow at the end of the report week. California prices fall with lower demand for heating and cooling. The price at SoCal Citygate in Southern California decreased $1.49 from a high of $5.76/MMBtu last Wednesday to $4.27/MMBtu yesterday, with temperatures averaging 60 degrees Fahrenheit. The price at PG&E Citygate in Northern California fell 16¢, down from a high of $4.05/MMBtu last Wednesday to $3.89/MMBtu yesterday. Northeast prices end at weekly highs after a week of weather-driven volatility. At the Algonquin Citygate, which serves Boston-area consumers, the price went up 74¢ from $0.84/MMBtu last Wednesday to a high of $1.58/MMBtu yesterday after reaching a low of $0.38/MMBtu on Friday. Temperatures in Boston were unseasonably warm, averaging 70 degrees Fahrenheit. At the Transcontinental Pipeline Zone 6 trading point for New York City, the price increased 84¢ from $0.64/MMBtu last Wednesday to a high of $1.48/MMBtu yesterday after reaching a low of $0.28/MMBtu on Friday. The Tennessee Zone 4 Marcellus spot price increased 92¢ from $0.44/MMBtu last Wednesday to $1.36/MMBtu yesterday. The price at Dominion South in southwest Pennsylvania rose 86¢ from $0.52/MMBtu last Wednesday to $1.38/MMBtu yesterday. Permian Basin prices rise. The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, averaged $2.39/MMBtu last Wednesday, 21¢/MMBtu lower than the Henry Hub average price. Yesterday, the price at the Waha Hub averaged a weekly high of $2.49/MMBtu, 28¢/MMBtu lower than the Henry Hub average weekly high. Record-high liquefied natural gas (LNG) feedgas demand from the Gulf coast market has recently contributed to the relatively high price at the Waha Hub. Supply declines. According to data from IHS Markit, the average total supply of natural gas fell by 2.4% compared with the previous report week. Dry natural gas production decreased by 0.7% compared with the previous report week. Average net imports from Canada decreased by 31.9% from last week. Demand falls, driven by lower building consumption, setting new November daily low. Total U.S. consumption of natural gas fell by 14.6% compared with the previous report week, according to data from IHS Markit. Natural gas consumed for power generation declined by 4.9% week over week. In the residential and commercial sectors, consumption declined by 34.6%, reaching a low of 12.5 Bcf on Saturday, the lowest November level since at least 2006. Industrial sector consumption decreased by 3.7% week over week. Natural gas exports to Mexico decreased 0.4%. Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 10.2 Bcf/d, or 0.2 Bcf/d higher than last week, and reached 10.5 Bcf/d on November 11, surpassing the previous record high set last week. U.S. LNG exports decrease week over week. Eighteen LNG vessels (eight from Sabine Pass, four from Cameron, three from Freeport, and one each from Elba Island, Cove Point, and Corpus Christi) with a combined LNG-carrying capacity of 65 Bcf departed the United States between November 5 and November 11, 2020, according to shipping data provided by Bloomberg Finance, L.P.