Natural gas prices didn’t’ do much during recent days after they had tumbled down during last week. The total demand rose last week mainly due to the rise in the power and industrial sectors. The natural gas production and rig count continued to decline. The storage levels continue to rise but at a slower rate than in the past. I still guess at the current pace the storage will peak around late October at 3,600.
Here is an analysis and short review on the latest changes in U.S natural gas market based on the EIA update for the week ending on August 3rd:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) rose for the eighteenth consecutive week; last week the storage levels increased by 0.75% or by 24 Bcf; the storage reached to 3,241 billion cubic feet for all lower 48 states; the current storage is 13.5% above the 5-year average, and is also 16.8% above the storage during the same week in 2011 – this is a slight decline in the storage levels that were nearly the 14%- 17% range a week earlier. During the parallel week of August 2011 the NG injection reached 25 Bcf and the five year average injection for the first week of August was 45 Bcf. Further, this is the fifteenth consecutive week in which the injections were lower than the injection during the same week in 2011. According to my (very) crude estimates, if this trend will continue the storage level will peak around the end of October at 3,600 Bcf, which lower than the storage level in 2011.
The rise in storage was primarily because of a 30 Bcf injection from the Eastern consumption region storage.
In the following chart are the weekly changes in storage (and Henry Hub spot price between the years 2011 and 2012. The chart presents the recent rise in natural gas prices. All awhile the storage levels are stocking up at slower pace than in the past.
During last week the Henry Hub spot price edged down by 0.3% to a weekly average price of $3.12/mmbtu. The Henry Hub price was still $1.09/mmbtu below its price during the same week in 2011.
Consumption
During last week the average U.S consumption, on a national level, increased by 0.71% (W-over-W). The consumption was 2.93% higher than last year.
The industrial sector led the rise with a 1.48% gain. Further, many other sectors also rose on a weekly scale except for the residential/commercial sector that decreased by 1.53%. The total demand for gas was up by 0.75% than the previous week levels and was 3.41% above the same week in 2011.
Production and Imports
Imports from Canada rose during last week by 1.27%; they were 1.16% below the levels in 2011.
The gross production edged down last week by 0.44% but was 2.2% above the production level in 2011. As a result, the total supply of natural gas declined by 0.26% during last week.
According to the report the natural gas rotary rig count declined by 7; by the end of last week the number of rigs reached 498.
On a national level, the U.S temperatures were 2.0 degrees warmer than the 30-year normal but 2.0 degrees cooler than last year. The higher than normal weather is among the factors keeping the demand for natural gas robust.
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