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Natural Gas Market Overview: Consumption Is Starting To Rise, But Slowly

May 08, 2020 10:47 AM ETDGAZ, UGAZF, UNG, BOIL, KOLD, FCG, GASX, GAZ, UNL, MLPG10 Comments


  • In the absence of a coronavirus-induced lockdown, total demand for U.S. natural gas (consumption + exports) would have totaled around 595 bcf for the week ending May 8.
  • In reality, however, total demand was a lot weaker. We currently expect the EIA to report a build of 108 bcf next week, 8 bcf larger than a year ago.
  • Natural gas consumption by the industrial users has bottomed out and is beginning to increase.
  • U.S. LNG feedgas flows seem to have stabilized and can potentially ramp up quickly because LNG stocks are currently just "half-full".
  • Annual storage "surplus" is projected to shrink by -40 bcf by June 12. However, storage "surplus" vs. 5-year average is actually projected to expand (by +58 bcf over the same period).
  • This idea was discussed in more depth with members of my private investing community, Natural Gas Fundamentals. Get started today »

This report covers the week ending May 8, 2020.

Total Demand (if there was no coronavirus)

In the absence of a coronavirus-induced lockdown, we estimate that the aggregate demand for U.S. natural gas (consumption + exports) would have totaled around 595 bcf for the week ending May 8 (down 0.7 bcf/d w-o-w (week over week), but up +5.1 bcf/d y-o-y (year over year)). The deviation from the norm would have remained positive and increased from +11.2 bcf/d to +12.7 bcf/d.

Source: Bluegold Research estimates and calculations

In reality, however, total demand was a lot weaker. For example, natural gas consumption by industrial users has already dropped below the norm and below last year's level (see the chart below). At the same time, notice that consumption has already bottomed out and is beginning to increase.

Source: Bluegold Research estimates and calculations

This week, the weather conditions have warmed up considerably across the contiguous United States. We estimate that the number of nationwide heating degree-days (HDDs) edged up by 3% w-o-w (from 49 to 50), while the number of nationwide cooling degree-days (CDDs) increased by 46% (from 20 to 29). Indeed, total energy demand (measured in total degree-days - TDDs) should be as much as 30.9% above last year's level.

Non-degree-day factors

Non-degree-day factors were "bullish" (vs. last year) but only marginally. The most important five non-degree-day factors that we are looking at are: nuclear outages, the spread between natural gas and coal (coal-to-gas switching), wind speeds, solar radiation, and hydro inflows. In the week ending May 8:

  • Nuclear outages were mostly below the norm (17.5 GW per day on average). Please note that the bullish impact from seasonal maintenance at nuclear power plants will be subsiding in the weeks ahead as nuclear power plants are returning to service - see the chart below.

Thank you for reading this article. We also write daily and weekly reports, covering key variables in the U.S. natural gas market (supply, demand, storage, prices, and more). We provide the following to subscribers:

We are offering a two-week free trial, and we will soon begin to cover the global LNG market. Come and join us.

This article was written by

Bluegold Trader profile picture
Bluegold Trader (BGT) is an independent provider of public market information and trading analytics. BGT is a one-stop shop for all your research needs in energy and forex trading.

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Comments (10)

notice you said demand should be 595bvf...but you never said what it was actually...might be proprietary
think were looking at 112bcg build
demand will start to increase as country opens up
PT Larry profile picture
Thanks for the article
mobius2010 profile picture
so...what's the well count. I haven't seen it yet.
oil rigs dropped by 33 nat gas minus1
Oil rigs can be blended natural gas and oil or just oil.
Good data and commentary,thanks.
So besides nitrogen plants and refineries which are still operating and large users of nat gas, and power plants which industrial users have reduced their nat gas draw that are projected to resume operation and increase demand?
elliot_mllr profile picture
My guess is petrochemical plants, transforming ethane into ethylene and then polyethylene and propane into propylene and then polypropylne, and butane and propane into LPG.
Elliot Miller
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