Natural gas prices slightly rose again during last week as the demand for natural gas continues to rally; that being said the demand for natural gas is still lower than last year (during the same week), which could explain the low natural gas price level for the season. Furthermore, the warmer than normal weather also helps keep natural gas prices to remain low.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on December 9th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) sharply decreased for the third consecutive week; last week by 2.66% or by 102 Bcf; the natural gas storage reached 3,729 billion cubic feet for all lower 48 states; the current natural gas storage is 10.3% above the 5-year average, and is 4.3% above the storage level during the same week in 2010.
The sharp drop in storage was primarily due to a 50 Bcf extraction from the Eastern region natural gas storage.
In the chart below are the weekly changes of natural gas storage (weekly figures) and Henry Hub natural gas prices during 2011; the Henry Hub spot price slightly rose during the past couple of weeks. During last week the Henry Hub spot price slightly inclined by 0.6% to a weekly average price of $3.39/mmbtu. The Henry Hub price was $1.07/mmbtu below its price level the same week in 2010.
The US natural gas consumption inclined again last week: the average US natural gas consumption rose by 7.93% (week over week) during last week on a national level. The residential/commercial sectors led the gains with a 12.28% increase, followed by the electric power sector. That being said, lat week’s natural gas consumption was still 7.73% below the levels recorded the same week in 2010.
Production and Imports
Imports from Canada sharply inclined during last week by 17.53% to match the increase in demand for natural gas for heating purposes, but the imports were also 22.11% below the levels in 2010.
Dry natural gas production on the other hand slightly slipped during last week by 0.46%. As a result the total supply of natural gas rose by 0.94% during last week.
According to the report the natural gas rig count sharply declined by 36 by the end of last week to reach 820.
On a national level, the US temperatures were 1 degrees warmer than normal, and 5.9 degrees warmer than last year. Despite the warmer weather, there were high regional differences with the Mountain region reaching colder than normal temperatures.
Prices for the Week Ending December 9th
Nymex Henry Hub Future Price (short term delivery) sharply declined during last week by 4.05% and reached on Friday $3.32/mmbtu; its average daily change was -1.47%, and its weekly average price was 4.40% below the previous week’s average price.
To sum up, natural gas consumption, imports and prices increased while natural gas storage and production declined during the week of December 9th.
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