The natural gas market continues to cool off and the decline in price doesn’t seem to have an end in sight. The natural gas (May delivery) future is still below the $2 mark. The natural gas storage did rise again but at a slightly slower pace than a year earlier. This might be because the high oil prices shifted the demand to natural gas, and as the supply slowly declines the injections to storage also decrease.
Here is an update on the U.S natural gas market development based on the EIA review for the week ending on April 13th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) increased for the fourth consecutive week; last week the storage levels increased by 1.01% or by 25 Bcf; the natural gas storage settled at 2,512 billion cubic feet for all lower 48 states; the current natural gas storage is 57.7% above the 5-year average, and is also 53.1% higher than the storage at the same week in 2011. As a comparison, during the same week in April 2011 the total natural gas injection was 47 Bcf. This means that the current injection was smaller than a year earlier so perhaps there is an adjustment to the high storage levels.
The increase in storage was primarily because of a 13 Bcf injection from the Eastern consumption region natural gas storage.
In the following graph are the weekly changes in natural gas storage (and Henry Hub spot price for 2011-2012. During the previous week the Henry Hub spot price decreased by 2% to a weekly average price of $1.93/mmbtu – the lowest price level in over two years. Furthermore, the Henry Hub price was $2.19/mmbtu below its price during the same week in 2011.
The average U.S natural gas consumption, on a national level, declined by 4.47% (week over week) during last week. The residential/commercial sector led the fall with a 17.44% decrease. The total demand for gas was 4.42% below the previous week’s levels but was 6.12% above the same week in 2011.
Production and Imports
Imports of natural gas from Canada rose during last week by 1.24%, but the imports were 6.66% below the levels in 2011.
The gross natural gas production edged down last week by 0.56% but is 5.7% above the production level in 2011. As a result the total supply of natural gas decreased by 0.47% during last week.
According to the report the natural gas rotary rig count decreased by 23; by the end of last week the number of natural gas rigs reached 624.
On a national level, the US temperatures were very slightly cooler than than 30-year normal.
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