The price of natural gas sharply rose today as the EIA released its recent weekly update: the storage buildup was 35Bcf, which was lower than expected. Despite the low injection, it was still higher than the five year average. Moreover, the recent market reaction might not last long on account of hotter than normal weather forecast in the East coast in the coming weeks.
The underground natural gas storage (Billion Cubic Feet) rose again during last week by 0.93% or by 35 Bcf; the storage reached 3,814 billion cubic feet for all lower 48 states; the current storage is 1.5% above the 5-year average but is 2.9% below the storage during the same week in 2012. The latest injection was higher than the five year average and last year’s: During the same week in November 2012 the natural gas injection was 21 Bcf, and the five year average injection to storage for the same week of October was 25 Bcf. This week’s injection was mostly due to the producing region, in which the injection was 22 Bcf.
The current expectations are that the temperatures will reach higher than normal levels throughout the East coast and Midwest. Considering the expected high temperatures for the season, the demand for natural gas in the residential/commercial sector is likely to diminish in the coming weeks. Further, the heating degrees days are estimated to remain below normal and last year’s. These factors are likely to curb down the recent rally in the price of natural gas in the near future. Nonetheless, the ongoing changes in the weather forecast (we are in the midst of the seasonal shift) could also play a role in the sharp fluctuations in the price of natural gas.
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