Natural gas prices (Henry Hub) rose very sharply due to high demand in the electric sector; the high demand is mainly stemmed from the current extreme heat wave (or “heat dome”) in several locations throughout all lower 48 states. According to expectation this “heat dome” is likely to end by next week. If this will be the case, it may bring down the price of Henry Hub next week.
Despite the increased demand for natural gas, the natural gas storage continues to stock up; this trend is attributed to seasonality.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on July 15th:
Natural gas Storage
The underground natural gas storage (Billion Cubic Feet) inclined for the fifteenth straight week; last week by 2.3% or by 60 Bcf; as a result, the natural gas storage inclined to 2.671 billion cubic feet for all lower 48 states – the highest stock level since January 14th, 2011; the natural gas storage is still 2.2% below the 5-year average, and 7.4% below the storage level during the same week in 2010.
This rise in storage was primarily due to a 50 Bcf injection in the Eastern Consuming Region natural gas storage.
The chart below shows the natural gas storage (weekly figures) and Henry Hub natural gas prices during 2010-2011; the chart shows the seasonality effect of natural gas storage; it also shows the slowly upward trend of natural gas spot price in recent weeks. The Henry Hub is still $0.07/mmbtu below its price level the same week last year.
Due to the recent heat wave in the US, the domestic natural gas consumption inclined by 3% compared with previous week’s average consumption. The power sector led rose by only 1% compared to the previous week, but the main spike came over the weekend.
Production and Imports
The U.S. natural gas production reached an average of 64.1 Bcf per day which is a 0.2% increase compared with last week’s average production.
Natural gas imports from Canada averaged 6.8 Bcf per day during last week, an increase of 4.5% compared to last week.
According to the report the natural gas rig count fell by 12 during the week to reach 875.
The US temperatures were slightly cooler than last week, but warmer than normal: they have reached a weekly average of 77.1 degrees for the week ending on July 14th, which were 2.3 degrees warmer than last year, and 2.9 degrees cooler than normal.
Prices for the week ending July 15th
Natural gas spot price (Henry Hub) increased during the week by 3.22% and reached on Friday to $4.49/mmbtu; its average daily change was 1.4%, and its weekly average price was 2.77% above the previous week’s average price.
The Nymex Henry Hub Future Price (August delivery) also inclined by 3.11% during the week, and its average price was 3.85% above last week’s average price.
To sum up, natural gas prices, storage, imports, production and consumption inclined during the week of July 15th.
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