The natural gas market showed some resilience in recent weeks as natural gas prices started to rise. The rise was mainly in the natural gas future price that suggests speculation around an increase in consumption of natural gas in the remaining days of March.
Let’s examine in detail the recent EIA weekly report regarding natural gas market in the U.S. for the week ending on March 18th:
Natural gas Storage
Natural gas storage decline very moderately and as of last week (March 18th) the underground natural gas storage (Billion Cubic Feet) fell for the eighteenth straight week, by 0.4%, or 6 billion cubic feet to reach a total of 1,612 billion cubic feet for all lower 48 states; this draw, was smaller than last week’s draw (56 billion cubic feet) and less than the 5-year average draw of 17 BcF.
For the western region the natural gas underground storage there was a small rise of 1 BcF to reach 222 BcF – a first rise this year.
The chart below shows both the natural gas storage (weekly figures) and Henry Hub spot price changes during 2011; it shows a moderate change in natural gas spot price during last week and the leveling of natural gas storage.
Natural gas consumption rose in the U.S. during the week ending on March 18th: the average daily consumption in the US increased by 9.6 Bcf or 6.1% during the week (from Thursday, March 17 to Wednesday, March 23); the rise is reflected in the residential and commercial sectors’ consumption that increased by 11.1 Bcf/d or 15.2% during the week.
Production and Imports
The US domestic production of natural gas continues to be high due to increase in production from gas fields such as the Marcellus Shale in the Northeast and the Haynesville Shale in Louisiana. The production reached an average 63 Bcf per day, which is higher similar to the production rate last week – a very high level in historic perspective.
The imports of natural gas to the US continued to drop; according to BENTEK, imports from Canada were 5.5 Bcf per day, lower by 8% than last year same time and 0.3 Bcf per day below the average the week earlier.
The weather in the US was warmer by 3 degrees than the season normal for the week ending on March 17th but 1 degree colder than the same week last year, as the U.S. temperatures were on a weekly average of 47.0 degrees.
Prices for the week ending March 18th
Natural gas spot price (Henry Hub) also inclined from beginning to end of the week by 2.56% and reached 4$/mmbtu at the end of the week. On average, it rose by 1.16% on a daily basis, and the average weekly price was 2.1% above the average weekly price in the previous week.
The Nymex Henry Hub Future Price (April delivery) inclined last week by 6.54% from beginning to end of the week; and, its average price was 3.5% higher than last week’s average price.
In total, natural gas imports and storage fell during that week, while natural gas spot price, consumption and production rose.
For further reading:
- Natural gas Henry Hub price continues its rally – March 24
- Natural gas prices forecast – 22 March
- Natural gas spot price in 2010 and projection to 2011
- Natural gas market keeps on leveling out | EIA review, Mar 18
- Natural gas market continues to cool down | EIA review, Mar 11
- Natural gas storage fell, consumption rose | EIA review, Mar 4