The weather forecasts predict that the upcoming Hurricane Irene will strike North Carolina coming Saturday. Some predict that the upcoming Hurricane will reduce demand for natural gas as the rain and wind will curb the electricity demand for cooling households. On the other hand, the Hurricane might damage natural gas pipelines and cause NG production shutdown. This means this Hurricane might affect either way on the price of natural gas in the upcoming week.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on August 19th:
Natural gas Storage
The underground natural gas storage (Billion Cubic Feet) continues stocking up as it rose for the twentieth straight week; last week by 2.6% or by 73 Bcf; thus, the natural gas storage rose to 2,906 billion cubic feet for all lower 48 states – the highest stock level since January 7th, 2011; the natural gas storage is still 1.9% below the 5-year average, and 4.6% below the storage level during the same week in 2010.
This increase in storage was primarily due to a 58 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 2011; the chart shows the seasonal stock up of natural gas storage; it also shows the recent downward trend of natural gas spot price: The Henry Hub spot price fell last week by 1.7% compared with last week’s price and is currently $0.29/mmbtu below its price level the same week last year.
There was a slight increase in natural gas consumption last week: despite the stabilized temperatures, the U.S. domestic natural gas consumption inclined by 4.3% over the week with the power sector leading the charge with a 10% increase week over week – the gains in the power sectors were mostly in Texas with its summer heat wave.
Production and Imports
The U.S. total nominal gas supply slightly inclined by 0.7% (W-o-W); dry gas production nearly didn’t change as it reached 62.4 Bcf per day – an increased of 0.3% compared with the production rate a week before. The Domestic dry gas production currently stands on 6.8% above this time last year.
Natural gas imports from Canada inclined by 3.8%last week compared with the previous week’s average to an average of 5.7 Bcf per day, but they are still 16.6% below the same week last year. The LNG imports didn’t change much as well and reached an average of 0.4 Bcf per day – 56.9% below the same week in 2010.
According to the report the natural gas rig count increased by 4 during the week to reach 900 – a six month high.
The US temperatures were warmer than normal but were slightly cooler than last week: they have reached a weekly average of 74.6 degrees for the week ending on August 18th, which were 0.4 degrees warmer than normal, but 2.4 degrees below the temperatures from last week. The weather forecasts are all predicting that the Hurricane Irene will reach North Carolina on Saturday. The National Hurricane Center provides frequent updates on the status of hurricanes and tropical storms: http://www.nhc.noaa.gov/
Prices for the week ending August 19th
Natural gas spot price (Henry Hub) decreased during the week by 2.09% and reached on Friday $3.99/mmbtu; its weekly average price was 1.91% below the previous week’s average price.
The Nymex Henry Hub Future Price (September delivery) also fell by 1.48% during the week, but its average price was 1.77% below last week’s average price.
To sum up, natural gas storage, production, imports and consumption inclined while natural gas prices fell during the week of August 19th.
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