Natural gas prices continued their rally during most of the week. I have already talked about the recovery of natural gas prices and think it’s a little over blown. The natural gas storage rose again at a slower pace than a year earlier. The supply of natural gas edged up during last week mainly due to a rise in imports and production; the total demand in the U.S decreased.
Here is an analysis and report on the developments in U.S natural gas market based on the EIA update for the week ending on May 11th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) rose for the eight consecutive week; last week the storage levels increased by 2.34% or by 61 Bcf; the natural gas storage settled at 2,667 billion cubic feet for all lower 48 states; the current natural gas storage is 40.8% above the 5-year average, and is also 40.9% above the storage during the same week in 2011 – this a drop in the levels of storage as it reached nearly the 50% mark. As a comparison, during the same week in May 2011 the total natural gas injection was 92 Bcf. This is the third consecutive week in which the injections are lower the than the injection during the parallel week in 2011. If this trend will continue the storage level will peak by November at 3,800-4,000 Bcf, which isn’t higher than the normal storage levels.
The increase in storage was primarily because of a 47 Bcf injection from the Eastern consumption region natural gas storage.
In the following chart are the weekly shifts in natural gas storage (and Henry Hub spot price between 2009 and 2012. During the previous week the Henry Hub spot price rose by 3.1% to a weekly average price of $2.33/mmbtu. Nevertheless, the Henry Hub price was still $1.85/mmbtu below its price during the same week in 2011.
During last week the average U.S natural gas consumption, on a national level, declined by 5.05% (W-over-W).
The power sector led the fall with a 10.92% decrease. The total demand for gas was 4.74% below the previous week’s levels but was 6.22% above the same week in 2011.
Production and Imports
Imports of natural gas from Canada rose during last week by 0.72%; they were also 1.49% above the levels in 2011.
The gross natural gas production rose last week by 0.17% and is 3.67% above the production level in 2011. As a result the total supply of natural gas increased by 0.34% during last week.
According to the report the natural gas rotary rig count fell by 8; by the end of last week the number of natural gas rigs reached 598.
On a national level, the US temperatures were 4.4 degrees warmer than the 30-year normal and 2.6 warmer than the same period last year.
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