Natural gas price changed direction and slightly rose during last week as the demand for natural gas started to pick up. That said, the natural gas storage continued to stock up and is still well above the storage levels from recent years. On top of that the natural gas production remains high so it doesn’t look like natural gas prices will make a comeback in the near future.
Here is a summary of the recent U.S natural gas market provided by the EIA regarding the week ending on March 23rd:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) continued to stock up for the second consecutive weeks, last week the storage levels rose by 2.39% or by 57 Bcf; the natural gas storage settled at 2,437 billion cubic feet for all lower 48 states; the current natural gas storage is 58.6% above the 5-year average, and is also 50.3% above the storage level during the same week in 2011. As a comparison, during the same week in March 2011 the total natural gas injection was 12 Bcf. This means at the current stage the gap between the normal storage levels and the current level will continue to expand; there is also the possibility of natural gas storage reaching its max capacity – in such a case we may see an even sharp decline in natural gas price. The currently high crude oil prices are probably keeping the prices of natural gas from diving.
The increase in storage was primarily due to a 34 Bcf injection from the producing region natural gas storage.
In the following chart are the changes in natural gas storage (weekly figures) and Henry Hub natural gas prices between the years 2011 and 2012. During last week the Henry Hub spot price rose by 2.4% to a weekly average price of $2.16/mmbtu. Furthermore, the Henry Hub price was $1.54/mmbtu below its price level the same week in 2011.
The average U.S natural gas consumption, on a national level, slightly rose by 2.4% (week over week) during last week. The residential/commercial sectors led the rise with a 10.4% increase. The total demand for gas was 2.32% above the levels from the previous week but was 14.8% below the levels of the same week in 2011.
Production and Imports
Imports of natural gas fromCanadarose during last week by 6.46%; on the other hand the imports were also 16.51% below the levels in 2011.
The gross natural gas production edged up last week by 0.16%, and is 4.42% above the production level in 2011. As a result the total supply of natural gas increased by 0.7% during last week.
According to the report the natural gas rotary rig count decreased by 7; by the end of last week the number of natural gas rigs reached 663.
On a national level, the U.S temperatures were still 14.1 degrees warmer than 30-year normal, and 8.9 degrees warmer from the same week last year.
Prices for the Week Ending March 23rd
The Nymex Henry Hub Future (April delivery) declined during last week by 2.15% and reached on Friday $2.28 /mmbtu; its average daily change was -0.42%, while its weekly average price was 1.18% above the previous week’s average price.
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