The natural gas prices continued their rally, partly due to the recent colder than normal temperatures during the last couple of weeks of March.
Here’s a short summary of this week’s EIA report regarding natural gas market in the U.S. for the week ending on March 25th:
Natural gas Storage
The underground natural gas storage (Billion Cubic Feet) rose for the first time this year with a 12 billion cubic feet injection during the week of March 25th or 0.7% increase, and reached a total of 1,624 billion cubic feet for all lower 48 states; the stocks are 68 Bcf above the 5-year average.
This injection was solely due to the rise of 25 Bcf in the producing region’s storage; in the western and eastern regions’ storages there were moderate draws. This sort of situation is normal to happen during March.
The chart below shows both the natural gas storage (weekly figures) and Henry Hub spot price changes during 2010-2011; it shows how there are similar trends for the prices and storage during 2011. During 2011, the weekly percent changes of these two data series have a 0.51 correlation, even though it’s more likely to see a negative correlation. In 2010 the correlation of these two series was -0.24.
Consumption
Natural gas consumption rose in the U.S. during the week ending on March 25th: the average consumption increased by a robust 23.2% compared to last week’s average consumption; the rise is mainly in the residential and commercial sectors’ consumption that increased by 41.1% during the week.
The seasonally of natural gas’s demand is easy to see in the chart below:
Production and Imports
The supply of natural gas also continued its rally as it reached an average 68.1 Bcf per day, which is 2% higher than last week’s production rate.
The imports of natural gas from Canada to the US rose; according to BENTEK, imports from Canada were 6.3 Bcf per day, higher by 3.2% than the same time last year, and 1 Bcf per day above last week’s average.
The weather in the US was warmer by 3 degrees than the season normal for the week ending on March 24th but nearly equal to the same week last year, as the U.S. temperatures were on a weekly average of 49.1 degrees. Nonetheless, there were regional differences: in the East South Central and West South Central Regions showed warmer than normal temperatures while the Pacific Region showed below normal temperatures. Obviously the regions that suffered from colder than normal were the regions that demanded more natural gas for heating.
Prices for the week ending March 25th
Natural gas spot price (Henry Hub) rose during the week by 3.51% to 4.13$/mmbtu on Friday, March 25th. Its weekly average price was 6.3% above the previous week’s price.
The Nymex Henry Hub Future Price (April delivery) also rose last week by 5.74% during the week; and its average price was 6.4% higher than last week’s average price.
In total, natural gas imports, storage, prices, consumption and production rose during the week ending on March 25th.
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