Natural Gas Storage Rose by only 30 Bcf– May 11th

Natural gas prices spiked during the week and it seems this rally might continue in the near future. I have already referred to this recovery and think it’s a little over blown. The natural gas storage increased again at a slower pace than a year earlier. The supply of NG edged down during last week mainly due to a drop in imports; the total demand in the U.S also decreased.   

Here is an analysis and report on the developments in U.S NG market based on the EIA update for the week ending on May 4th:

NG Storage

The underground storage (Billion Cubic Feet) increased for the seventh consecutive week; last week the storage levels rose by 1.16% or by 30 Bcf; the NG storage settled at 2,606 billion cubic feet for all lower 48 states; the current storage is 44.5% above the 5-year average, and is also 44.2% above the storage during the same week in 2011. As a comparison, during the same time in May 2011 the total natural gas injection was 70 Bcf. This is the second consecutive week in which the injections are nearly half the amount than injection during the parallel time in 2011. If this trend will continue the storage level will reach a similar level as in 2011 within the next 20 weeks. This decline in injections is primarily due to a decrease in imports (mainly from Canada, see below for more), which makes sense: no reason to import more NG when you storage is very high…

The rise in storage was primarily because of a 24 Bcf injection from the Eastern consumption region storage.

In the following chart are the developments in storage (and Henry Hub spot price between 2009 and 2012. During the previous week the Henry Hub spot price spiked by 13% to an average price of $2.26/mmbtu. This was the sharpest gain for NG since the beginning off December 2011. Nevertheless, the Henry Hub price was $2.24/mmbtu below its price during the same time in 2011.

natural gas prices chart 2011 (Henry Hub Natural Gas storage 2012 May 11Consumption

The average U.S NG consumption, on a national level, fell by 7.1% (W-O-W) during last week. The residential/commercial sectors led the drop with a 24.19% decrease. The total demand for gas was 6.99% below the previous week’s levels but was 8.95% above the same time in 2011.

Production and Imports

Imports of NG from Canada fell during last week by 7.58%; they were also 7.58% below the levels in 2011.

The gross NG  production slipped last week by 0.46% but is 4.07% above the production level in 2011. As a result the total supply of NG decreased by 1.06%.

According to the report the natural gas rotary rig count decreased by 7; by the end of last week the number of natural gas rigs reached 606.

On a national level, the US temperatures were 2.6 degrees warmer than the 30-year normal and 3.3 warmer than the same period last year.

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