Amidsoft natural gas utility demand and continued supply growth in the face offalling prices, March Northeast average spot natural gas prices saw among thelargest year-on-year declines.
Northeastspot prices averaged $1.533/MMBtu during the month, lower than the Gulf Coastregion average, as prices slid 30.2% versus the prior month and a 58.7% declineversus the prior year, as U.S. average prices dropped to $1.582/MMBtu.
A sharp drop in natural gas utility demand, or LDC demand,coupled with increased supply year over year helped to bring spot pricessharply lower at hubs serving demand centers in the Northeast.
At 2.01 Bcf/d and 0.95 Bcf/d, respectively, deliveries toLDCs in Transco Zone 6 and along Algonquin Gas Transmission LLC were 30.6% and 21.5%lower year over year during the month. Over the same period, U.S. EnergyInformation Administration forecasts show that Marcellus natural gas 17.43Bcf/d. The 1.26 Bcf/d year-on-yearincrease reflects a sharp upward revision to prior estimates from increasedpipeline capacity that is helping to transport trapped gas from the region tomarket. In a separate report, the government agency found oil and gasdrilling costs havefallen as much as 30% from 2012 levels. Productivity improvements have helpedto mitigate the impact of falling prices on producers.
Meanwhile, natural gas storage inventories remain elevated.For the week ended March 25, working gas in in the Lower 48 sat at2,468 Bcf, 1,002 Bcf above the year-ago level and 843 Bcf above the five-yearaverage, according to data from the EIA.
With a 75.4% drop, Algon Gates experienced the largestyear-over-year drop in average spot prices as they fell to an average of$1.900/MMBtu. At $1.294/MMBtu and $1.305/MMBtu, respectively, spot natural gasprices at Transco Zone 6 Non-NY and Zone 6 NY fell 65.2% and 66.8% over thesame period.
The drop in the region's spot prices was not confined todemand centers. Amid production growth, spot prices at Leidy averaged$1.041/MMBtu, a 25.9% year-over-year decline.
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