The prices of natural gas prices tumbled down during yesterday following the recent EIA report, in which the natural gas storage buildup was 111 Bcf. This news is likely to further pressure down the prices of natural gas as it indicates the demand for natural gas is dwindling. .
Here is an analysis and short breakdown of the recent developments in U.S natural gas market based on the EIA update for the week ending on June 1st:
Natural Gas Storage
The underground natural gas storage (Billion Cubic Feet) rose during last week by 5.18% or by 111 Bcf; the storage reached 2,252 billion cubic feet for all lower 48 states; the current storage is 3% below the 5-year average, and 21.5% below the storage during the parallel week in 2012. During the same week in June 2012 the NG injection was 62 Bcf, and the five year average injection for the parallel week of June was 94 Bcf. This news is likely to further pull down the rates of natural gas. Based on past years, in the weeks to follow the injection are likely to grow.
This week’s injection was mostly from Eastern consumption region with 58 Bcf injections.
In the chart below 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 rallied in recent weeks while the storage levels remained low.
During the previous week, the Henry Hub spot price declined by 0.5% to a weekly average price of $4.12/mmbtu. The Henry Hub price is $1.46/mmbtu above its price during the same week last year.
During last week, the average U.S consumption, on a national level, rose by 3.55% (W-over-W). Moreover, the consumption was 3.58% below last year’s. The Power sector led the rise with a 25.08% gain.
Production and Imports
Imports from Canada rose during last week by 16.34%; the gross production slipped last week by 0.36%.
These developments in the supply and demand might suggest the market has slightly tightened.
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