Natural gas prices increased again during last week, but this week they have tumbled down. During last week the demand for natural gas in the power sectors sharply increased; the total supply also increased mainly due to the rise in Canadian imports. The Gross production edged up despite the ongoing decline in rotary rigs. The storage rose again at a lower rate than a year earlier.
Here is an analysis and short review on the latest changes in U.S natural gas market based on the EIA update for the week ending on May 24th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) rose again for the tenth consecutive week; last week the storage levels increased by 2.59% or by 71 Bcf; the storage reached to 2,815 billion cubic feet for all lower 48 states; the current storage is 34.6% above the 5-year average, and is also 35.1% above the storage during the same week in 2011 – this is a fall in the levels of storage that were nearly the 38% mark during the previous week. As a comparison, during the same week in May 2011 the total natural gas injection was 83 Bcf. This is the fifth consecutive week in which the injections are lower than the injection during the parallel week in 2011. If this trend will continue the storage level will peak by November at 3,900- 4,000 Bcf, which is in the normal storage levels.
The increase in storage was primarily because of a 44 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 2011 and 2012. During the previous week the Henry Hub spot price rose by 4% to a weekly average price of $2.59/mmbtu. Nevertheless, the Henry Hub price was still $1.76/mmbtu below its price during the same week in 2011.
During last week the average U.S consumption, on a national level, rose by 3.54% (W-over-W).
The power sector led the rise with a 13.2% gain. On the other hand all other sectors declined on a weekly scale. The total demand for gas is 3.59% above the previous week’s levels and is 10.57% above the same week in 2011.
Production and Imports
Imports from Canada rose during last week by 9.34%; they were also 13.63% above the levels in 2011.
The gross production edged up last week by 0.73% and is 3.86% above the production level in 2011. As a result, the total supply of natural gas rose by 1.37% during last week.
According to the report the natural gas rotary rig count declined by 6; by the end of last week the number of rigs reached 594.
On a national level, the U.S temperatures were 3.6 degrees warmer than the 30-year normal and 1.6 warmer than the same period last year.
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