Natural gas prices continued to rise even though the U.S natural gas market doesn’t seem to pick up: during last week the demand edged down mainly in the residential/commercial sector while the total supply edged up mainly due to the rise in Canadian imports. The Gross production nearly didn’t change. The storage increased again at a lower rate than a year earlier.
Here is an analysis and short review on the latest developments in U.S natural gas market based on the EIA update for the week ending on May 18th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) increased again for the ninth consecutive week; last week the storage levels rose by 2.89% or by 77 Bcf; the storage reached to 2,744 billion cubic feet for all lower 48 states; the current storage is 37.8% above the 5-year average, and is also 37.6% above the storage during the same week in 2011 – this is a fall in the levels of storage that were nearly the 40% mark during last week. As a comparison, during the same week in May 2011 the total natural gas injection was 105 Bcf. This is the fourth consecutive week in which the injections are lower by nearly 30 Bcf (each week) than the injection during the parallel week in 2011. If this trend will continue the storage level will peak by November at 3,700-3,800 Bcf, which is in the normal storage levels.
The rise in storage was primarily because of a 45 Bcf injection from the Eastern consumption region storage.
In the following chart are the weekly changes in storage (and Henry Hub spot price between the years 2009 and 2012. During the previous week the Henry Hub spot price increased by 6.9% to a weekly average price of $2.49/mmbtu. Nevertheless, the Henry Hub price was still $1.66/mmbtu below its price during the same week in 2011.
During last week the average U.S consumption, on a national level, slipped by 0.9% (W-over-W).
The residential/commercial sector led the fall with a 9.14% decrease. The total demand for gas is 0.86% below the previous week’s levels but is 8.98% above the same week in 2011.
Production and Imports
Imports from Canada increased during last week by 2.03%; they were also 9.22% above the levels in 2011.
The gross production edged down last week by 0.04% but is 3.63% above the production level in 2011. As a result, the total supply of natural gas rose by 0.17% during last week.
According to the report the natural gas rotary rig count edged up by 2; by the end of last week the number of rigs reached 600.
On a national level, the US temperatures were 2.6 degrees warmer than the 30-year normal and 4.9 warmer than the same period last year.
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