Natural gas prices continue their downward trend of recent months; the natural gas storage levels are still very high for the season and the extraction of natural gas from storage is still low for the season. This situation is partly due to the late arrival of winter and the high natural gas production in the U.S.
Here is a summary of the recent U.S natural gas market info collected by the EIA for the week ending on January 13th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) decreased for the eighth straight week; last week by 2.58% or by 87 Bcf; the natural gas storage reached 3,290 billion cubic feet for all lower 48 states; the current natural gas storage is 20.8% above the 5-year average, and is 19.6% above the storage level during the same week in 2011. As a comparison, during the second week of January the total natural gas extraction of was 243 Bcf. This means that not only the natural gas storage levels are high, but also the extraction is still very low for the season. The late arrival of winter is part of the reason. But these circumstances may explain the sharp downward trend of natural gas prices for this time of the year.
The sharp decline in storage was primarily due to a 61 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 decreased to a weekly average price of $2.81/mmbtu. The Henry Hub price was $1.65/mmbtu below its price level the same week in 2011.
The average U.S natural gas consumption, on a national level, sharply rose by 20.51% (week over week) during last week. The residential/commercial sectors led the charge with a 31.27% gain. The 2012 consumption in the residential/commercial sector still is 8.26% below the levels of the second week of 2011.
Production and Imports
Imports of natural gas from Canada rose during last week by 6.23%; the imports were 25.28% below the levels in 2011.
The gross natural gas production slightly slipped during last week by 0.04%, and is 10.17% above the production level in 2011. As a result the total supply of natural gas slipped by 0.03% during last week.
According to the report the natural gas rig count declined by 20; by the end of last week the number of natural gas rigs reached 791.
On a national level, the US temperatures were 9.1 degrees warmer than 30-year normal, and 13.1 degrees warmer than last year. The warmer weather for the season is probably among the reasons for the low natural gas prices.
Prices for the Week Ending January 13th
Natural gas price, the Nymex Henry Hub Future Price (short term delivery) sharply fell during last week by 12.75% and reached on Friday $2.69 /mmbtu; its average daily change was -2.67%, and its weekly average price was 6.75% below the previous week’s average price.
To sum up, natural gas consumption, imports, prices and storage declined, while natural production increased during the week of January 13th.
For further reading: