Natural gas prices resumed their upward trend following the release of the recent EI natural gas report. The total NG demand hiked during the week mainly due to the sharp increase in the demand in the residential/commercial sector. The natural gas production edged down while the rig count increased. The storage levels rose again at a slower pace than last year and the 5-year average. According to my rough guess at the current pace the storage will peak around mid-November at around 4,000.
Here is an analysis and short review of the recent changes in U.S natural gas market based on the EIA report for the week ending on October 4th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) increased for the thirtieth consecutive week; last week the storage levels rose by 1.97% or by 72 Bcf; the storage reached 3,725 billion cubic feet for all lower 48 states; the current storage was 7.8% above the 5-year average, and is also 6.8% above the storage during the same week in 2011 – these figures are lower than the figures from last week. During the parallel week of October 2011 the NG injection was 112 Bcf, and the five year average injection for the first week of October was 84 Bcf. Thus, the recent injection was lower than last year and the past years’ average injections. According to my (very) crude estimates, if this trend will continue the storage level will peak around the mid-November at nearly 4,000 Bcf, which is still higher than the storage level in 2011.
The rise in storage was primarily due to a 42 Bcf injection from the Eastern consumption region storage.
In the following chart are the developments (based on weekly figures) in storage (and Henry Hub spot price between the years 2011 and 2012. As seen, natural gas prices resumed their upward trend in recent weeks. All awhile the storage levels continue to stock up at a slower rate than in recent years.
During last week the Henry Hub spot price hiked again by 9.9% to a weekly average price of $3.22/mmbtu. The Henry Hub price remained $0.31/mmbtu below its price during the same week in 2011.
During last week, the average U.S consumption, on a national level, rose by 5.98% (W-over-W). The consumption was also 17.77% higher than last year.
The residential/commercial sector led the rise with a 44.15% hike. Industrial sector’s demand also rose last week by 2.39%. On the other hand, the power sector’s consumption also decreased last week by 1.29%; the demand for NG in the power sector declined by 11.84%. The total demand for gas was up by 5.95% than the previous week levels and was 18.67% above the same week in 2011.
Production and Imports
Imports from Canada rose during last week by 2.61%; they were 2.51% above the levels in 2011.
The gross production edged down last week by 0.16% and was 1.58% above the production level in 2011. As a result, the total supply of natural gas edged up by 0.05% during last week.
According to the report the natural gas rotary rig count rose by 2; by the end of last week the number of rigs reached 437.
On a national level, the U.S temperatures were 2.6 degrees warmer than the 30-year normal and were also 2.6 degrees warmer than last year. The rise in the temperatures may have contributed to the growth in the demand for natural gas.
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