Natural gas prices continued their downward trend during last week, but the injections to the U.S natural gas storage came to halt this week; this might indicate that the demand for natural gas is starting to rise.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on November 25th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) slightly declined for the first time in over thirty-three weeks of injections; last week by 0.03% or by 1 Bcf; the natural gas storage reached 3,851 billion cubic feet for all lower 48 states; the current natural gas storage is 7.3% above the 5-year average, and is 1.1% above the storage level during the same week in 2010.
The slight decrease in storage was primarily due to a 17 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 continued its downward trend during the past few months. During last week the Henry Hub spot price sharply fell by 5.8% to a weekly average price of $2.92/mmbtu. The Henry Hub price was $0.98/mmbtu below its price level the same week in 2010.
Despite the low consumption of natural gas during Thanksgiving weekend, as the week progressed the US natural gas consumption started to rise but still remained lower than the previous week: the average US natural gas consumption declined by 6.0% (week over week) during last week on a national level. The residential/commercial sectors led the drop with a 7.2% decrease.
Production and Imports
Dry natural gas production inclined during last week by 1.2% to 65 Bcf per day.
According to the report the natural gas rig count declined by 6 by the end of last week to reach 865.
On a national level, the US temperatures were 2.6 degrees warmer than normal, but they have fallen by 3.4 degrees compared with the previous week’s temperatures.
Prices for the Week Ending November 25th
Nymex Henry Hub Future Price (December delivery) sharply fell during last week by 4.07%; its average daily change was -2.05%, and its weekly average price was 5.24% below the previous week’s average price.
Natural gas spot price (Henry Hub) on the other hand sharply rose by 4.12% during the week, and its average price was 2.04% above last week’s average price.
The difference between the Henry Hub future and spot gas prices was in Contango during the week, and by Friday the gap reached $0.71/mmbtu.
To sum up, natural gas production increased while natural gas prices, storage and consumption declined during the week of November 25th.
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