Here is a summary of the recent EIA weekly report regarding the natural gas market in the U.S. for the week ending on February 11th:
The extreme cold weather is mostly behind many parts in the US, especially in the Northeast (even though it’s still colder than normal, on average), as a result the demand for natural gas declined which causes the further decline in its price.
Here are the highlights of the recent EIA report along with my insight:
Prices for the week ending February 11th
Natural gas spot price (Henry Hub) reached 3.96$/mmbtu at the end of last week – an 8.3% decline from beginning to end. On average, it fell by 2.43% on a daily basis, and the average weekly price was 23% below the average weekly price in the previous week.
The Nymex Henry Hub Future Price (March delivery) also declined last week by 4.6% from beginning to end of the week; and its average price was 23.5% lower than last week’s average price.
Natural gas Storage
In my last review on U.S. natural gas storage, there was a drop of in underground natural gas storage (Billion Cubic Feet); according to the recent report for the week of 11th of February, the natural gas storage continued to decline for the thirtieth straight week, this time by 10.9%, a fall of over 233 billion cubic feet; this draw is much larger than the 5-year average draw of 150 BcF; furthermore, the natural gas storage is also lower than the five year average by 6.3% BcF.
The natural gas storage reached a total of 1,911 billion cubic feet for all lower 48 states, which is lower by 71 billion cubic feet for the same week in 2010; this is also the lowest level since April 2010.
As the extreme cold weather subsided there was a fall in natural gas consumption in many regions in the U.S.: the average daily consumption in the US dropped by 17.1% compare to the previous week, reaching 82.1 Bcf; combined consumption for both residential and industrial sectors declined by 23.2% reaching 40.2 Bcf per day.
Domestic production of dry natural gas continued to decline in the passing week mainly as a result of the freeze-off of equipment and maintenance; the cold weather caused an estimated of 5 Bcf per day in dry natural gas production to be off-line.
This drop in production could explain the ongoing rise in drawing from storage, despite the fall in consumption.
The weather in the US was still colder than the season normal for the week ending on February 11th, and also colder compare to the previous week: the average U.S. temperatures were colder than normal with a weekly average of 30.3 degrees – 1.8 degrees below last week’s temperatures, and 4.9 degrees below the 5-year average. Nonetheless, despite the average temperatures being lower than last week, the extreme cold weather, mainly in the Northeast, has subsided causing natural gas prices to fall.
In total, natural gas storage, consumption and production declined.. The prices showed some resistance but in total fell.
For further reading (in this site):
- Natural gas spot price in 2010 and projection to 2011
- Natural gas prices outlook for February 2011
- Natural gas prices outlook– 17 February