The prices of natural gas prices continued their downward trend and may continue their plunge following the recent EIA report in which the natural gas storage remained virtually unchanged. Perhaps the comfortable weather in many parts in the U.S reduced the demand for natural gas in recent weeks and thus pressured down the price of natural gas.
Here is an analysis and short breakdown of the recent shifts in U.S natural gas market based on the EIA report for the week ending on December 7th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) remained virtually unchanged during last week as the storage levels edged up by only 0.05% or by 2 Bcf; the storage reached 3,806 billion cubic feet for all lower 48 states; the current storage is 8% above the 5-year average, and 1.3% above the storage during the parallel week in 2011. During the same week in December 2011 the NG extraction was 102 Bcf, and the five year average extraction for the parallel week of December was 137 Bcf. Thus, the recent modest injection isn’t common during for this time of the year. This news is likely to further pull down the prices of natural gas. Based on past years, however, in the weeks to follow the extractions are likely to rise.
This week’s extraction was from Eastern consumption region with 12 Bcf, while in the Producing Region there was a 12 Bcf injection.
In the chart herein are the developments (based on weekly numbers) in storage (and Henry Hub spot price in past years. As seen, the price of natural gas has changed direction and fell in recent week while the storage levels only slightly fell.
During last week, the Henry Hub spot price declined by 6.8% to a weekly average price of $3.41/mmbtu. The Henry Hub price is only $0.02/mmbtu above its price during the same week last year.
During last week, the average U.S consumption, on a national level, rose by 14.68% (W-over-W). Conversely, the consumption was 14.36% below last year’s.
The residential/commercial sector led the rise with a 28.69% gain. The relatively low consumption (compared to last year) might have been due to the warmer weather; the power sector’s consumption also rose last week by 6.69% but was much lower than last year’s rate. Finally, Industrial sector’s demand slightly rose last week by 1.98%. The total demand for gas increased by 14.53% than the previous week but was 13.97% below the same week in 2011.
Production and Imports
Imports from Canada rose during last week by 1.29%; they were 19.21% below the levels in 2011.
The gross production decreased last week by 0.7% and was 1.61% above the production level in 2011. As a result, the total supply of natural gas declined by 0.44% during last week.
According to the report the natural gas rotary rig count decreased by 7; by the end of last week, the number of rigs reached 417.
On a national level, the U.S temperatures were 9.3 degrees warmer than the 30-year normal and were also 8.4 degrees warmer than last year.
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