Gas prices reflect early winter weather at market locations across the country. With the exception of natural gas traded in the Marcellus area, natural gas prices rose at all U.S. market locations over the report week (Wednesday-to Wednesday). Temperatures were unseasonably cold across the nation, including deep into the South. Snow blanketed the Great Lakes and continued through the report week in upstate New York. Prices at the Algonquin Citygate, serving customers in Boston, the Tennessee Zone 6 200 Line, located outside of Connecticut, and Dracut, located in Massachusetts, exceeded $10/MMBtu during the report week. Mid-Atlantic hubs also reflected the colder weather and higher demand, with prices at Transcontinental Pipeline’s Zones 5 and 6, which span South Carolina through New York, ranging from $7.53/MMBtu to $9.40/MMBtu on Monday, November 17. As temperatures moderated through the week, Northeast prices began coming down on Tuesday, with Algonquin Citygate ending the week at $5.84/MMBtu, down $2.20 for the week, and Transco Zone 6-NY at $4.79/MMBtu, up 80 cents for the week, though down from its Monday $9.40 high.
Prices increased on a smaller scale at trading locations in the Midwest. Natural gas prices at the Chicago Citygate started the week at $4.48/MMBtu and increased to $5.05/MMBtu to close the report week. Temperatures remained cold in and around the Great Lakes, not breaking 40° F yesterday in Chicago, keeping demand high along with prices.
The Henry Hub spot price also increased during the report week. Prices at that location started the week at $4.20/MMBtu and closed at $4.39 yesterday.
Prices at most Marcellus area locations decrease, remain low. From Wednesday-to-Wednesday, prices at both Tennessee Zone 4 (Marcellus) and Transcontinental Pipeline’s Leidy Line fell, ending the week below $3/MMBtu. Although there was some day-to-day variation in prices at these two locations, they did not reflect the stronger changes in prices that other Northeast and Mid-Atlantic pricing points exhibited.
December futures contract price increases over the report week. The December contract started the report week at $4.185/MMBtu, moving up to $4.341 on Monday. After dipping on Tuesday to $4.244, the December futures price ended at its high for the report week at $4.371 yesterday, a gain for the week of nearly 19 cents. The 12-month strip, the average of December 2014 through November 2015, ended the week up by more than a dime, ending the report week at $4.066/MMBtu.
Driven by the cold, consumption outpaced supply for the week. Dry production fell during the week, down 1.5% from the previous week, though still 4.7% greater than the same period last year. Imports of natural gas from Canada increased by 5.6% overall, with the largest increase found in the Northeast, where average daily imports rose from below 0.5 Bcf/d to more than 1.2 Bcf/d on Tuesday, November 18. This represented a 154% increase week-over-week, and a 32% increase over the previous year, while LNG sendout remained minimal.
Total demand increased more than 35% from the week before, largely driven by residential and commercial consumption, which grew 68.2% week-over-week. There were also strong levels of growth in the level of natural gas consumed in the electric power sector (power burn). Nationally, power burn grew 23%, with growth shown in all regions, with the exception of the Rockies. In the Southeast, which uses more gas for power generation than any other region, power burn rose 28% this week compared to last week. Freezing temperatures during the last half of the report week extended as far south as Florida. The Southeast region relies more on electric power to satisfy space heating needs, which increases power burn in that region during periods of cold weather. Natural gas consumed in the industrial sector also increased this week, rising 6% over last week’s consumption.