Natural Gas Storage Rose by 28 Bcf– September 6th

Natural gas prices shifted with an unclear trend during last week as the spot price declined while the future price increased. Hurricane Isaac may have affected the natural gas production and caused the decline in the injection to storage during last week. The total demand rose last week mainly due to the rise in the demand for power sector. The natural gas production and rig count declined. The production may have also been adversely affected by Hurricane Isaac that resulted in a suspension of oil and gas production in the Gulf of Mexico. The storage levels continue to rise but by a slower rate than last year. According to my rough guess at the current rate the storage will peak around November at 4,000.

Here is an analysis and short review of the recent developments in U.S natural gas market based on the EIA report for the week ending on August 31st:

Natural Gas Storage

The underground natural gas storage (Billion Cubic Feet) rose for the twenty-fifth consecutive week; last week the storage levels rose by 0.83% or by 28 Bcf – the lowest injection in the past three weeks; the storage reached 3,402 billion cubic feet for all lower 48 states; the current storage is 10.7% above the 5-year average, and is also 13.1% above the storage during the same week in 2011 – these slightly lower than the figures from last week. During the parallel week of August 2011 the NG injection was 55 Bcf and the five year average injection for the fourth week of August was 66 Bcf. The recent injection was much lower than past years’ injections. According to my (very) crude estimates, if this trend will continue the storage level will peak around the middle of November at 4,000 Bcf, which is higher than the storage level in 2011.

The rise in storage was primarily due to a 34 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. The chart shows the recent downward trend in natural gas prices. All awhile the storage levels are stocking up at a slower rate than in recent years.

During last week the Henry Hub spot price declined by 2.5% to a weekly average price of $2.72/mmbtu. The Henry Hub price was also $1.29/mmbtu below its price during the same week in 2011.

natural gas prices chart 2011 (Henry Hub Natural Gas storage 2012 Septmeber 6


During last week the average U.S consumption, on a national level, rose by 2.69% (W-over-W). The consumption was 11.25% higher than last year.

The power sector led the rise with a 7.25% gain. On the other hand, other sectors’ demand declined led by the residential/commercial sector’s demand that decreased last week by 4.28%. The total demand for gas was up by 2.61% than the previous week levels and was 12.17% above the same week in 2011.

Production and Imports

Imports from Canada rose during last week by 1.17%; they were 13.35% below the levels in 2011.

The gross production declined last week by 1.78% but was 0.77% above the production level in 2011. As a result, the total supply of natural gas declined by 1.62% during last week.

According to the report the natural gas rotary rig count fell by 13; by the end of last week the number of rigs reached 473.

On a national level, the U.S temperatures were 2.7 degrees warmer than the 30-year normal and 0.1 degrees cooler than last year. The slightly higher than normal weather is among the factors pulling up the demand for natural gas in certain sectors such as power.

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