Week opens with continued low natural gas prices

No organized market lists gas price above $3/mmBtu

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Henry Hub natural gas prices continue to be unusually low, according to the latest price data from the Energy Information Administration (EIA).

The futures price for May delivery of NYMEX Henry Hub natural gas was listed at only $2.51/mmBtu, according to daily price data posted April 13 by EIA. In addition, none of the 10 organized markets monitored by EIA reported a daily spot natural gas price above $2.78, according to the latest data.

The Mid-Atlantic listed a spot gas price of only $1.47/mmBtu.

A look at somewhat longer-term data from EIA reveals that gas prices have basically been on a steady decline since the much-discussed polar vortex of January 2014.

During January and the early winter of 2014 Henry Hub gas prices spiked to almost $8/mmBtu, according to EIA’s Natural Gas Weekly Update, which was released April 9. In recent months of 2015, gas prices have sagged to below $3, according to the data.

EIA also said that natural gas stocks enter the injection season at 11% below the five-year average.

“Working natural gas in storage as of March 31, the traditional end of the heating season, totaled 1,470 billion cubic feet (Bcf), based on data from the Weekly Natural Gas Storage Report,” EIA said. This is 180 Bcf (11%) lower than the five-year (2010-14) average. Net withdrawals during this year's heating season, which started on Nov. 1, 2014 were 2,101 Bcf, 87 Bcf (4%) lower than the five-year average and 857 Bcf (29%) lower than record high withdrawals last year.

“A year ago, at the end of March 2014, inventories after a prolonged and severe winter were at an 11-year low and about 1,000 Bcf lower than the five-year (2009-13) average. Record net injections in 2014 brought natural gas inventories to 3,571 Bcf at the end of October, which was 7% lower than the five-year average. Injections continued during the first week in November, raising inventories to 3,611 Bcf,” EIA went on to report.

“While this winter was colder than normal on average across the nation, regional temperatures varied,” EIA said. “Temperatures in the western part of the country were warmer than average, while the eastern part of the country had record low temperatures and significant snowfall,” EIA said.

This led to high levels of natural gas consumption in the East in January, with the largest demand increase from the residential and commercial sectors because of increased space heating requirements.

“The April Short-Term Energy Outlook forecasts October 2015 natural gas storage inventories at 3,781 Bcf, 0.2% lower than the five-year average,” EIA said. Continued high levels of production are expected through this summer despite low natural gas prices, with infrastructure additions in the Northeast providing further support to production growth. “Domestic production is forecast to average 74.1 Bcf/d from April 1 through October 31, an increase of 5.4 Bcf/d over the same period last year,” EIA went on to say in its natural gas update.

http://www.eia.gov/naturalgas/weekly/

Wayne Barber
About the Author

Wayne Barber

Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants.

Wayne can be reached at wayneb@pennwell.com.

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