Natural gas prices continue to rise as the natural gas market heats up. The hotter than normal weather is likely among the factors driving natural gas prices up as the demand for natural gas is rising. Natural gas rig count continues to decline (last week by 21). The total demand rose mainly due to the increased demand in the power sector. The total supply decreased. 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 22nd:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) increased for the thirteenth consecutive week; last week the storage levels rose by 1.9% or by 57 Bcf; the storage reached to 3,063 billion cubic feet for all lower 48 states; the current storage is 25% above the 5-year average, and is also 27.1% above the storage during the same week in 2011 – this is a decrease in the storage levels that were nearly the 27%- 29% mark last week. During the same week in June 2011 the NG injection was 78 Bcf and the five year average injection for the third week of June was 79 Bcf. Further, it is the ninth 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 November at 3,900 Bcf, which is a normal storage level.
The increase in storage was primarily because of a 34 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 last week the Henry Hub spot price hiked by 12.5% to a weekly average price of $2.52/mmbtu. On the other hand, the Henry Hub price was still $1.81/mmbtu below its price during the same week in 2011.
Consumption
During last week the average U.S consumption, on a national level, increased by 1.65% (W-over-W).
The power sector led the rise with a 4.7% increase. On the other hand all some sectors fell on a weekly scale including the residential/commercial sector (declined by 2.85%). The total demand for gas was up by 1.56% than the previous week levels and is 13.09% above the same week in 2011.
Production and Imports
Imports from Canada increased during last week by 1.17%; they were 17.23% above the levels in 2011.
The gross production fell last week by 0.73% but is 3.18% above the production level in 2011. As a result, the total supply of natural gas decreased by 0.72% during last week.
According to the report the natural gas rotary rig count declined by 21; by the end of last week the number of rigs reached 541.
On a national level, the U.S temperatures were 2.7 degrees warmer than the 30-year normal and 0.6 degrees warmer than last year.
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