Natural gas price declined during the past couple of weeks even though its weekly average price was higher than at the beginning of the month. The amount of natural gas extracted from storage during last week was very similar to the same week in 2011, but at the current rate the storage levels will remain much higher than in recent years. This could mean natural gas prices will resume their freefall in the weeks to come.
Here is a summary of the recent U.S natural gas market info collected by the EIA for the week ending on February 24th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) declined for the 14th consecutive week; last week by 3.16% or by 82 Bcf; the natural gas storage reached 2,513 billion cubic feet for all lower 48 states; the current natural gas storage is 45% above the 5-year average, and is also 43% above the storage level during the same week in 2011. As a comparison, during the same week of February in 2011 the total natural gas extraction was 85 Bcf – very similar to this week’s extraction. This means at the current extraction pace the storage levels will remain much higher than last year’s levels.
The decrease in storage was primarily due to a 58 Bcf extraction from the Eastern region natural gas storage.
In the following chart are the shifts 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 rose by 4.4% to a weekly average price of $2.63/mmbtu. But the Henry Hub price was still $1.21/mmbtu below its price level the same week in 2011.
Consumption
The average U.S natural gas consumption, on a national level, slightly declined by 1.55% (week over week) during last week. The residential/commercial sectors led the fall with a 2.61% decrease. The current consumption level is 0.2% above the levels during the same week in 2011.
Production and Imports
Imports of natural gas from Canada sharply rose during last week by 5.5%; the imports were still 1.75% below the levels in 2011.
The gross natural gas production slightly rose last week by 0.57%, and is 7.67% above the production level in 2011. As a result the total supply of natural gas edged up by 0.98% during last week.
According to the report the natural gas rig count decreased by 6; by the end of last week the number of natural gas rigs reached 710.
On a national level, the US temperatures were still 4.4 degrees warmer than 30-year normal, and 1.1 degrees warmer than last year.
Prices for the Week Ending February 24th
The Nymex Henry Hub Future Price (March delivery) sharply decreased during last week by 4.85% and reached on Friday $2.55 /mmbtu; its average daily change was -0.97%, but its weekly average price was 3.88% higher than previous week’s average price.
A detailed analysis of natural gas prices for the week of February 24th is herein.
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