The decline in temperatures throughout the US caused a dramatic fall in natural gas consumption for the power sector resulting in decreases in the natural gas prices (Henry Hub) during the week. This also means a sharp decline in imports of natural gas from Canada and an ongoing increase in natural gas storage. .
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on August 12th:
Natural gas Storage
The underground natural gas storage (Billion Cubic Feet) keeps on stocking up as it inclined for the nineteenth straight week; last week by 1.8% or by 50 Bcf; thus, the natural gas storage inclined to 2,833 billion cubic feet for all lower 48 states – the highest stock level since January 7th, 2011; the natural gas storage is still 2.5% below the 5-year average, and 5.8% below the storage level during the same week in 2010.
This increase in storage was primarily due to a 48 Bcf injection in the Eastern Consuming Region natural gas storage.
The chart below shows the natural gas storage (weekly figures) and Henry Hub natural gas prices during 2010 and 2011; the chart shows the seasonal effect of natural gas storage stocking up since April; it also shows the much lower natural gas spot price than a year before: The Henry Hub spot price is currently $0.34/mmbtu below its price level the same week last year.
The steep fall in temperatures throughout the US dragged a sharp fall in domestic natural gas consumption for the power sector; the power sector natural gas burn fell by almost 19% week over week.
Production and Imports
The U.S. weekly dry gas production nearly didn’t change as it reached 61.4 Bcf per day – an increased of 0.2% compared with the production rate a week before.
Natural gas imports from Canada sharply declined again last week compared with the previous weeks average by 10.4% to an average of 6.4 Bcf per day during last week. The LNG imports also sharply fell by over 30%.
According to the report the natural gas rig count increased by 13 during the week to reach 896.
The US temperatures were still warmer than normal despite the sharp fall in temperatures compared with the week before: they have reached a weekly average of 77.0 degrees for the week ending on August 11th, which were 2.1 degrees warmer than normal, but 2.3 degrees below the temperatures from last week.
Prices for the week ending August 12th
Natural gas spot price (Henry Hub) rose during that week by 4% and reached on Friday $4.16/mmbtu; its average daily change was 0.8%, but its weekly average price was 3.28% below the previous week’s average price.
The Nymex Henry Hub Future Price (September delivery) also inclined by 0.60% during the week, but its average price was 1.01% below last week’s average price.
To sum up, natural gas storage and production inclined while natural gas prices, imports and consumption fell during the week of August 12th.
For further reading:
- Natural gas storage rose by 25Bcf last week – August 12
- Natural gas market cools down in the US – August 5