The natural gas market continues to show resistance as consumption and production rose while natural gas spot price didn’t fall much during the week ending on February 25th. This might suggest that the production more than compensated for the recent rise in consumption in natural gas.
Let’s examine in detail the recent EIA weekly report regarding natural gas market in the U.S. for the week ending on February 25th:
Prices for the week ending February 25th
Natural gas spot price (Henry Hub) moderately declined from beginning to end of the week by 1.04% and reached 3.8$/mmbtu at the end of the week. On average, it fell by 0.2% on a daily basis, and the average weekly price was 1.5% below the average weekly price in the previous week. This small fall during the week shows that the price didn’t change much compare to the previous week.
The Nymex Henry Hub Future Price (March delivery) on the other hand inclined last week by 1.57% from beginning to end of the week; however its average price was 0.1% lower than last week’s average price.
Natural gas Storage
Natural gas storage continue to decline: last week (of 25th of February) the underground natural gas storage (Billion Cubic Feet) fell for the fifteenth straight week, by 4.6%, or 85 billion cubic feet; this draw, was similar to last week’s draw (81 billion cubic feet) and much smaller than the 5-year average draw of 131 BcF; furthermore, the natural gas storage was lower than the five year average by 15 BcF.
The natural gas storage reached a total of 1,745 billion cubic feet for all lower 48 states, which is higher by 8 billion cubic feet for the same week in 2010; this is also the lowest level since April 2010.
Natural gas consumption rose in the U.S. during the week ending on February 25th: the average daily consumption in the US increased by 5% compares to the previous week; the main cause for this rise is due to the incline by 6% compare to the previous week in residential and commercial sectors’ consumption. This might be because of the cold temperatures in the Northeast of US.
During December 2010 there was a huge rise in consumption of natural gas on the national level as it reached 2,724 BMcf – a 38.5% from November and higher by 9.7% than the consumption level in December 2009. This consumption level is the highest level since January 2010 and the highest level during December in the past decade.
Production and Imports
Domestic production of natural gas, after falling during the last several weeks, started to pick up and increased by 9 Bcf. According to BENTEK, natural gas production had inclined by 6% from the same week last year and slightly higher than last week, reaching an average of 63.1 BcF per day on Monday.
There was also a drop of 1% in Canadian imports of natural gas, which was also 17% lower than the same time last year.
The weather in the US was warmer than the season normal for the week ending on February 17th: the average U.S. temperatures were warmer than normal with a weekly average of 40.3 degrees – 1.7 degrees above normal, and 3.3 degrees above the last year’s temperatures.
In total, natural gas prices didn’t change much during that week, imports declined and production and consumption rose.
For further reading (in this site):
- Natural gas prices outlook for March 2011
- How well natural gas futures are in predicting the future?
- Natural gas spot price in 2010 and projection to 2011
- Natural gas storage and consumption decline as winter ends | EIA review, Feb 25
- Natural gas consumption declines despite cold weather | EIA review, Feb 18
- Natural gas production freeze on cold weather | EIA review, Feb 12
- Natural gas consumption | EIA review, February 4
- Natural gas consumption shows a sharp rise | EIA review, January 28