Here is a summary of the main news regarding the natural gas market in the U.S. for the week ending on February 4th, according to the recent EIA weekly report:
Natural gas spot price fluctuated with a moderate rise during that week; consumption, however rose while the production declined due to the cold weather throughout in the US. Thus there was a sharp draw from the natural gas storage. Here are the highlights of the recent EIA report along with my insight:
Natural gas spot price (Henry Hub) inclined by 1.1% during the week from beginning to end of the week. On average, it rose by 0.88% on a daily basis; on the other hand, the average weekly price is 1.3% below the average weekly price in the previous week.
The Nymex Henry Hub Future Price (March delivery), on the other hand, declined by 2.5% from beginning to end of the week; and its average price was 1.5% lower than last week’s average price.
Natural gas Storage
In my last review on U.S. natural gas storage, there was a drop of in underground natural gas storage (Billion Cubic Feet); according to the recent report for the week of 4th of February, the natural gas storage continued to decline for the twelfth straight week, this time by 8.9%, a fall of over 209 billion cubic feet; this draw is much larger than the 5-year average draw of 159 BcF; furthermore, the natural gas storage is also lower than the five year average by 45 BcF.
The natural gas storage reached a total of 2,144 billion cubic feet for all lower 48 states, which is lower by 71 billion cubic feet for the same week in 2010; this is also the lowest level since May 2010.
Domestic production of dry natural gas declined in the passing week to an average 5.4 Bcf/day, probably due to the freeze-off in the West, Mid-continent, and Gulf of Mexico regions.
Due to the cold weather (see below) there was a ongoing rise in natural gas consumption in many regions in the U.S.; as an example, during the week of February 4th there was an increase of 65% in average consumption in the Mid-continent region compare to the January average. In many cases, the prime contributor was the excess demand of electric power system.
The weather in the US was still colder than the season normal for the week ending on February 4th, however it was hotter compare to the previous week: the average U.S. temperatures were slightly colder than normal with a weekly average of 32.1 degrees – 2 degrees above last week’s temperatures, but 2 degrees below the 5-year average.
In total, natural gas consumption inclined, while natural gas storage and production declined. The prices showed some resistance but in total fell.
For further reading (in this site):
- Natural gas spot price in 2010 and projection to 2011
- Natural gas prices outlook for February 2011
- Oil and gas prices outlook– 9 February