Natural gas continues to heat up as it rose event day of last week. According to the latest EIA update, some of the increase could be attributed to the second extraction from storage for this season: the storage extraction was 13Bcf. This week’s extraction was higher than last year’s rate. The recent market reaction is likely to continue on account of expected low temperatures mainly in the East in the near future.
The Nymex Henry Hub Future (short term delivery) rose again by 4.94% and reached by Friday $3.95/mmbtu – its highest price level since June 2013; its average daily shift was 0.97%; its weekly average rate was 5.36% above last week’s average rate.
The gap between the NG future and spot prices – future minus spot – remained mostly in Backwardation during the previous week.
Natural Gas Charts
The following charts show the shifts in Nat-gas future (Nymex Henry Hub) in $/mmbtu during November 25-29.
In the second chart are the daily percent shifts of the Nymex Henry Hub future (short term delivery).
The underground natural gas storage (Billion Cubic Feet) fell again for the second time this season during last week by 0.34% or by 13 Bcf; the storage reached 3,776 billion cubic feet for all lower 48 states; the current storage is 0.4% above the 5-year average but is 2.3% below the storage during the same week in 2012. The recent extraction was lower than the five year average and last year’s: During the same week in November 2012 the natural gas injection was 4 Bcf, and the five year average extraction from storage for the same week of November was 17 Bcf. This week’s extraction was mostly due to the eastern consuming region, in which the extraction was 14 Bcf.
Weather and natural gas
The current projections are that the temperatures will remain lower than normal levels throughout the US (except Florida) mainly in the Northeast. Considering the expected low temperatures for the season, the demand for natural gas in the residential/commercial sector is likely to further increase in the near future. Moreover, the heating degrees days are estimated to be higher than normal and than last year’s. These factors could also pull up natural gas prices.
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