The natural gas prices sharply declined during last week despite the growing domestic demand for natural gas as the weather is getting colder. This is probably due to the substantial growth in onshore production, particularly in shale formations. The current expectations are of a loose natural gas market that will keep the Henry Hub prices lower than recent years even after considering the seasonality effect.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on November 4th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) inclined for the thirty-first straight week; last week by 1.0% or by 37 Bcf – the most modest increase since August 5th, which could mean a slowdown in the level of injections; the natural gas storage reached 3,831 billion cubic feet for all lower 48 states – the highest stock level since November 19th, 2010; the current natural gas storage is 5.9% above the 5-year average, but is still 0.2% below the storage level during the same week in 2010.
This increase in storage was primarily due to a 16 Bcf injection in the Eastern Consuming Region and a 15 Bcf injection in the production region natural gas storage.
The chart below presents the natural gas storage (weekly figures) and Henry Hub natural gas prices during 2010-2011; the Henry Hub spot price continued with its downward trend of the past several months; during the first week of November the Henry Hub spot price fell by 4.1% to a weekly average price of $3.47/mmbtu. The Henry Hub price was $0.08/mmbtu above its price level the same week in 2010.
US natural gas consumption changed direction during last week and retreated on a national level despite the cold weather.
Production and Imports
Dry natural gas production has moderately inclined during last week by 0.4% to 64 Bcf per day.
According to the report the natural gas rig count sharply declined by 27 by the end of last week to reach 907.
The US temperatures were 2.1 degrees cooler than normal, and 2.3 degrees cooler than last year.
Prices for the Week Ending November 4th
To sum up, natural gas storage and production increased while natural gas prices and consumption declined during the week of November 4th.
For further reading:
- Natural Gas Prices Outlook for November 2011
- Crude Oil Prices – Daily Outlook November 7
- U.S. Oil Stockpiles Sharply Fell by 15.3 Million Bbl – November 10