Natural gas prices changed direction and on the last week of November sharply increased even though the average temperatures in the U.S. is still warmer than normal.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on December 2nd:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) declined for the second consecutive week; last week by 0.52% or by 20 Bcf; the natural gas storage reached 3,831 billion cubic feet for all lower 48 states; the current natural gas storage is 8.7% above the 5-year average, and is 2.7% above the storage level during the same week in 2010.
The decrease in storage was primarily due to a 16 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 changed direction on the last week of November and sharply increased after it had fallen in the past few months. During last week the Henry Hub spot price sharply rose by 15.4% to a weekly average price of $3.37/mmbtu. The Henry Hub price was $0.83/mmbtu below its price level the same week in 2010.
The US natural gas consumption sharply rose last week: the average US natural gas consumption rose by 18.4% (week over week) during last week on a national level; the gains were mainly during the end of the last week. The residential/commercial sectors led the gains, followed by the electric power sector.
Production and Imports
Imports from Canada increased as well to match the increase in demand for natural gas for heating purposes.
Dry natural gas production on the other hand slightly declined during last week by 1.33%. According to the report, the decline in production was stem in part by freeze-offs of natural gas flows due to the cold weather in the West.
According to the report the natural gas rig count declined by 9 by the end of last week to reach 856.
On a national level, the US temperatures were 5.1 degrees warmer than normal, and 6.6 degrees warmer than last year. The warmest weather among US regions compared to its normal temperatures was the Northeast.
Prices for the Week Ending December 2nd
Nymex Henry Hub Future Price (short term delivery) slightly increased during last week by 1.70% and reached on Friday $3.58/mmbtu; its weekly average price was 3.85% above the previous week’s average price.
The difference between the Henry Hub future and spot gas prices was nullified on November 30th, but on the first couple of days of December the natural gas prices were in Contango; by Friday the gap reached $0.22/mmbtu.
To sum up, natural gas consumption, imports and prices increased while natural gas storage and production declined during the week of December 2nd.
For further reading:
- Natural Gas Storage Slightly Fell by 1 Bcf Last Week – December 2
- Natural Gas Storage Slightly Rose by 9 Bcf Last Week – November 24