Natural Gas Storage Rose by only 62 Bcf– June 22nd

Natural gas prices started to pick up during last week and they have managed to recover from their downward trend during most of June within a matter of days.  The hot weather mainly in the Northeast is raising the demand for natural gas and imports from Canada. The Northeast is also facing pipeline infrastructure constraints that may contribute to the tightening of the supply. Natural gas rig count continues to fall (last week by 3). The total demand rose mainly due to the rise in demand in the power sector. The total supply also increased. The storage levels continue to rise but at much slower 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 June 15th:

Natural Gas Storage

The underground natural gas storage (Billion Cubic Feet) rose for the twelfth consecutive week; last week the storage levels increased by 2.11% or by 62 Bcf; the storage reached to 3,006 billion cubic feet for all lower 48 states; the current storage is 27.1% above the 5-year average, and is also 29.2% above the storage during the same week in 2011 – this is a decline in the levels of storage that were nearly the 29%- 32% mark last week. During the same week in June 2011 the NG injection was 98 Bcf and the five year average injection for the third week of June was 84 Bcf. Further, it is the eighth consecutive week in which the injections were lower than the injection during the same week a year earlier. If this trend will continue the storage level will peak around the beginning of November at 3,900 Bcf, which is a normal storage level.

The rise in storage was primarily because of a 37 Bcf injection from the Eastern consumption region storage.

In the following chart are the weekly shifts in storage (and Henry Hub spot price between the years 2009 and 2012. During the previous week the Henry Hub spot price fell by 3.9% to a weekly average price of $2.24/mmbtu. Furthermore, the Henry Hub price was also $2.2.32/mmbtu below its price during the same week in 2011. Note that the sharp gain in natural gas rate didn’t reflect in the average because the rally occurred by the end of the week.

natural gas prices chart 2011 (Henry Hub Natural Gas storage 2012 June 22Consumption

During last week the average U.S consumption, on a national level, rose by 2.27% (W-over-W).

The power sector led the rise with a 7.11% increase. On the other hand all some sectors fell on a weekly scale including the residential/commercial sector (down by 5.02%). The total demand for gas was up by 2.21% than the previous week levels and is 11.74% above the same week in 2011.

Production and Imports

Imports from Canada decreased during last week by 1.03%; they were 28.15% above the levels in 2011.

The gross production edged up last week by 0.94% and is 3.86% above the production level in 2011. As a result, the total supply of natural gas increased by 0.96% during last week.

According to the report the natural gas rotary rig count fell by 3; by the end of last week the number of rigs reached 562.

On a national level, the U.S temperatures were slightly warmer than the 30-year normal and the same period last year.

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