The prices of natural gas prices rose during most of the week until yesterday. According to the recent report of the EIA, the total NG demand slightly increased again mainly due to the rise in the residential/commercial sector’s demand. The natural gas production declined; rig count fell. The storage levels fell for the first time this season mainly due to an extraction from the Eastern storage. According to the report, there are new pipelines expansions in the Northeast.
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 November 9th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) declined for the first time in thirty-five weeks; last week the storage levels fell by 0.46% or by 18 Bcf; the storage reached 3,911 billion cubic feet for all lower 48 states; the current storage is 5.6% above the 5-year average, and only 1.8% above the storage during the same week in 2011 – the gap between last year’s level, the 5-year average and current level continues to narrow. During the same week in November 2011 the NG injection was 12 Bcf, and the five year average injection for the parallel week of November was 17 Bcf. Thus, the recent extraction was premature compared to past years’ injections and last year’s injection during the same week. If there will only be extractions in the weeks to follow, the gap between the current storage levels and past year’s storage levels are likely to narrow.
The drop in storage was primarily due to a 23 Bcf extraction from the Eastern consumption region.
In the following chart are the developments (based on weekly numbers) in storage (and Henry Hub spot price between the years 2011 and 2012. As seen, the price of natural gas has risen in the past several weeks. All awhile the storage levels rose at a slower pace than in past years.
During last week, the Henry Hub spot price decreased again by 1.2% to a weekly average price of $3.4/mmbtu. The Henry Hub price remained only $0.02/mmbtu below its price during the same week in 2011.
During last week, the average U.S consumption, on a national level, rose by 0.36% (W-over-W). The consumption was also 8.26% higher than last year.
The residential/commercial sector led the rise with a 2.83% gain. The rise in consumption might have been due to the cold weather; on the other hand, the power sector’s consumption declined last week by 2.26%. Finally, Industrial sector’s demand also fell last week by 0.53%. The total demand for gas rose by 0.4% than the previous week levels and was 8.47% above the same week in 2011.
Production and Imports
Imports from Canada declined during last week by 6.38%; they were 3.39% below the levels in 2011.
The gross production decreased last week by 0.44% but was 1.79% above the production level in 2011. As a result, the total supply of natural gas declined by 0.84% during last week.
According to the report the natural gas rotary rig count declined by 11; by the end of last week the number of rigs reached 413.
On a national level, the U.S temperatures were 1.6 degrees cooler than the 30-year normal but were also 1.1 degrees cooler than last year.
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