Natural gas prices changed direction and sharply rose during recent days. Some attribute this recent rally to speculation over the upcoming higher than normal temperatures in the U.S that will raise consumption in natural gas. In the meantime, the natural gas prices are still very low for the season. The natural gas storage rose again at a slower pace than a year earlier. The supply of natural gas edged up during last week; the total demand in the U.S slightly increased.
Here is an analysis and report on the U.S natural gas market changes based on the EIA update for the week ending on April 27th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) increased for the sixth consecutive week; last week the storage levels increased by 1.1% or by 28 Bcf; the natural gas storage settled at 2,576 billion cubic feet for all lower 48 states; the current natural gas storage is 49.9% above the 5-year average, and is also 48.4% above the storage during the same week in 2011. As a comparison, during the same week in April 2011 the total natural gas injection was 72 Bcf. This means that the current injection was very similar to the injection a year earlier.
The rise in storage was primarily because of a 20 Bcf injection from the Eastern consumption region natural gas storage.
In the following chart are the weekly changes in natural gas storage (and Henry Hub spot price during 2011 and 2012. During the previous week the Henry Hub spot price sharply increased by 7.5% to a weekly average price of $2/mmbtu. Furthermore, the Henry Hub price was $2.39/mmbtu below its price during the same week in 2011.
Consumption
The average U.S natural gas consumption, on a national level, edged up by 0.59% (week over week) during last week. The power sector led the rise with a 6.08% increase. The total demand for gas was 0.57% above the previous week’s levels but was 15.47% above the same week in 2011.
Production and Imports
Imports of natural gas from Canada rose during last week by 3.81%, but were 0.83% below the levels in 2011.
The gross natural gas production rose last week by 0.14% but is 5.17% above the production level in 2011. As a result the total supply of natural gas increased by 0.13% during last week.
According to the report the natural gas rotary rig count decreased by 18; by the end of last week the number of natural gas rigs reached 613.
On a national level, the US temperatures were 1.1 degrees warmer than the 30-year normal and 1.7 cooler than the same period last year.
For further reading: