Natural gas price continued their tumbling down during last week. The winter season is nearing an end with demand for natural gas is falling and since the natural gas storage is still very high – nearly 50% above the levels form the same week last week, the chances of natural gas prices making a comeback seem slim. Therefore at the current conditions, we should keep seeing a descent in natural gas prices in the weeks to come.
Here is a summary of the recent U.S natural gas market provided by the EIA regarding the week ending on March 9th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) declined for the 16th consecutive week; last week by 2.63% or by 64 Bcf; the natural gas storage settled at 2,369 billion cubic feet for all lower 48 states; the current natural gas storage is 51.7% above the 5-year average, and is also 45% above the storage level during the same week in 2011. As a comparison, during the same week in March 2011 the total natural gas extraction was 56 Bcf – a similar amount extracted this week. This means at the current pace the storage levels will remain much higher than last year’s levels.
The decrease in storage was primarily due to a 55 Bcf extraction from the Eastern 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 2009 and 2012. During last week the Henry Hub spot price sharply declined by 7.8% to a weekly average price of $2.26/mmbtu. Furthermore, the Henry Hub price was $1.54/mmbtu below its price level the same week in 2011.
Consumption
The average U.S natural gas consumption, on a national level, sharply fell by 13.09% (week over week) during last week. The residential/commercial sectors led the drop with a 24.86% decrease. The total demand for gas was 12.73% below the levels during the same week in 2011.
Production and Imports
Imports of natural gas from Canada fell during last week by 8.04%; the imports were also 5.97% below the levels in 2011.
The gross natural gas production edged down last week by 0.05%, but is 5.41% above the production level in 2011. As a result the total supply of natural gas slipped by 0.75% during last week.
According to the report the natural gas rig count decreased by 21; by the end of last week the number of natural gas rigs reached 670.
On a national level, the US temperatures were still 3.7 degrees warmer than 30-year normal, and 3.1 degrees warmer than last year.
Prices for the Week Ending March 9th
The Nymex Henry Hub Future (April delivery) sharply decreased during last week by 6.45% and settled on Friday at $2.32 /mmbtu; its average daily shift was -1.29%, and its weekly average price was 8.45% below last week’s average.
A detailed analysis of natural gas prices for the week of March 9th is herein.
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