Natural gas prices changed direction during last week and sharply rallied from their tumble of past weeks; some of this rally might be explained by the announcement to cut natural gas production in the U.S. In the meantime, the extraction of natural gas from storage is still lower than the parallel week of 2011 .
Here is a summary of the recent U.S natural gas market info collected by the EIA for the week ending on January 27th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) declined for the tenth straight week; last week by 4.3% or by 132 Bcf; the natural gas storage reached 2,966 billion cubic feet for all lower 48 states; the current natural gas storage is 25.4% above the 5-year average, and is 24.6% above the storage level during the same week in 2011. As a comparison, during the same week of January in 2011 the total natural gas extraction of was 189 Bcf.
The sharp decline in storage was primarily due to a 100 Bcf extraction from the Eastern region natural gas storage.
In the following chart are the developments of natural gas storage (weekly figures) and Henry Hub natural gas prices during 2009-2012. During last week the Henry Hub spot price sharply rose to a weekly average price of $2.57/mmbtu. The Henry Hub price was $1.88/mmbtu below its price level the same week in 2011.
The average U.S natural gas consumption, on a national level, sharply declined by 13.83% (week over week) during last week. The residential/commercial sectors led the drop with a 12.13% decline. The 2012 consumption in the residential/commercial sector is 28.01% below the levels of the fourth week of 2011.
Production and Imports
Imports of natural gas from Canada rose during last week by 0.99%; the imports were 24.81% below the levels in 2011.
The gross natural gas production slightly rose last week by 0.07%, and is 7.95% above the production level in 2011. As a result the total supply of natural gas grew by 0.04% during last week.
According to the report the natural gas rig count declined by 3; by the end of last week the number of natural gas rigs reached 777.
On a national level, the US temperatures were 5.3 degrees warmer than 30-year normal, and 9.1 degrees warmer than last year. The warm weather is probably among the factors for the low extractions from the natural gas storage.
Prices for the Week Ending January 27th
The Nymex Henry Hub Future Price (February delivery) sharply increased during last week by 17.95% and reached on Friday $2.76 /mmbtu – the highest level since January 11th; its average daily change was 3.47%, and its weekly average price was 7.16% above the previous week’s average price.
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