The prices of natural gas prices changed direction and bounced back from their downward trend they have had during recent weeks. According to the recent EIA report, the natural gas storage declined by 82 Bcf. Nonetheless the weather remains unseasonable warm and thus may contribute to the decline in natural gas prices in recent weeks.
Here is an analysis and short breakdown of the latest developments in U.S natural gas market based on the EIA report for the week ending on December 14th:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) declined during last week by 2.15% or by 82 Bcf; the storage reached 3,724 billion cubic feet for all lower 48 states; the current storage is 10.2% above the 5-year average, and 1.8% above the storage during the parallel week in 2011. During the same week in December 2011 the NG extraction was 100 Bcf, and the five year average extraction for the parallel week of December was 141 Bcf. This news is likely to further pull up the prices of natural gas. Based on past years, however, in the weeks to follow the extractions are likely to grow.
This week’s extraction was mostly from Eastern consumption region with 49 Bcf extraction.
In the chart herein are the changes (based on weekly numbers) in storage (and Henry Hub spot price in past years. As seen, the price of natural gas has tumbled down in recent weeks while the storage levels remained high.
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, declined by 0.25% (W-over-W). Moreover, the consumption was 5.27% below last year’s.
The Power sector led the fall with a 2.49% drop. The relatively low consumption (compared to last year) might have been due to the warmer weather; the residential/commercial sector’s consumption rose last week by 0.75% but was lower than last year’s rate. Finally, Industrial sector’s demand slightly increased last week by 0.29%. The total demand for gas decreased by 0.22% than the previous week and was 4.93% below the same week in 2011.
Production and Imports
Imports from Canada rose during last week by 0.62%; they were 19.28% below the levels in 2011.
The gross production rose last week by 0.66% and was 1.82% above the production level in 2011. As a result, the total supply of natural gas increased by 0.6% during last week.
According to the report the natural gas rotary rig count edged down by 1; by the end of last week, the number of rigs reached 416.
On a national level, the U.S temperatures were 4.4 degrees warmer than the 30-year normal and were also 4.7 degrees warmer than last year.
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