After the extended holiday weekend, total demand witnessed significant declines dropping from a high of 87 Bcf/d on November 21st to 75 Bcf/d Thanksgiving day. Despite week-on-week declines of 2.4 Bcf/d, total demand managed to increase roughly 10 Bcf/d from the beginning of the week to 89.8 Bcf/d Friday. Rescomm demand declined 1.6 Bcf/d week-on-week to an average of 31.3 Bcf/d this week. Gas consumption for heating demand led the recovery as temperatures across the country declined, pushing rescomm up 5.5 Bcf/d from the beginning of the week through Friday. Despite somewhat volatile behavior throughout the week, power burn demand remained relatively flat week-over-week, decreasing 0.4 Bcf/d this week and averaging 21.4 Bcf/d. On the supply side, US production remained relatively flat this week, averaging 71.5 Bcf/d, down 0.2 Bcf/d compared to the previous week.
Despite strong demand over the past nine days, averaging 2.7 Bcf/d and reaching as high as 3.4 Bcf/d, 2016 marks the second lowest start to the winter season since at least 2011. November ended with demand averaging just 2.24 Bcf/d, more than 0.4 Bcf/d below 2015 levels and only 46 MMcf/d stronger than the lowest November level over this span. Demand this past month was dragged down by unseasonably warm weather, averaging 51.7 degrees Fahrenheit during the first half of the month before cooler temperatures set in. That said, those cooler temperatures are anticipated to continue in the near term averaging just 26 degrees F over the next six days. This should help boost demand, which is expected to average 3.6 Bcf/d over this time frame, as well as help provide price support for Rockies basis.
A cold snap is forecast to further lower temperatures across the Northeast in the coming days, with temperatures this weekend expected to fall to be in the mid 30’s. Total demand over the weekend is expected to increase 1.2 Bcf/d to average 21.7 Bcf/d through Monday, almost entirely a result of rescomm, projected to increase 1.2 Bcf/d to average 13.1 Bcf/d this weekend. Prices have already responded to this increased demand, trading up across the Northeast region for gas day December 2, likely to continue to rise. As a result of this expected colder weather and higher demand, multiple pipelines have issued low pressure operational flow orders in the region. The OFO Algonquin issued Tuesday remains in effect, adding momentum to demand-driven upward pressure seen at AGT city-gates, which climbed 71 cents yesterday to settle at $3.64/MMBtu. Tennessee has also issued an OFO that will take effect Saturday, December 3 for TGP Zones 5 and 6 - both hubs of which also traded up 45 and 55 cents to $3.73/MMBtu and $3.92/MMBtu respectively for gas day December 2.