The natural gas prices kept on increasing last week, as the consumption increases in parts of the US.
Here’s a summary of the recent EIA report on U.S natural gas market for the week ending on April 29th:
Natural gas Storage
The underground natural gas storage (Billion Cubic Feet) increased for the fourth straight week, last week by 4.3%; this was a 72 Bcf injection, as the total storage reached 1,757 billion cubic feet for all lower 48 states; the natural gas storage was 1% below the 5-year average, and 11.4% below the storage level during the same week in 2010.
This storage increase was mainly because of the injection of 41 Bcf from the Eastern Consuming Region natural gas storage.
The chart below shows the total natural gas storage (weekly figures) and Henry Hub natural gas prices 2011; notice that during natural gas prices bounced back last week after they fell for two straight weeks.
During 2011 (up to date), the weekly percent changes of these two data series have a 0.32 correlation, i.e. at 32% of the time as the storage levels dropped in a certain week, the price also declined. During the same time last year, the correlation was -0.019.
U.S. natural gas consumption rose by 10.3% during the week, and the residential and commercial sectors’ consumption led the increase as these sectors’ consumption was 54% higher than last year’s consumption during the same period.
As seen in the chart below, during February 2011, the natural gas consumption in the US dropped by 15% compared to January 2011. This might have explained the decline in natural gas prices at that time. The correlation between the monthly percent changes of prices and consumption during 2010 and 2011 is 0.7 – a strong positive correlation, as expected.
This shows that on average 70% of the change in natural gas prices during 2010-2011 was related to changes in demand and supply.
Production and Imports
The U.S. natural gas rigs increased last week by four and reached 882 rigs as the natural gas production kept on being high.
The imports of natural gas from Canada on the other hand continued to decline and were below the 6.0 Bcf per day, as they fell by 4.3% compared to last week.
The US temperatures reached a weekly average of 59.1 degrees, which was warmer than last year by 3.6 degrees, and 2.9 degrees higher than normal for the week ending on April 28th. Nonetheless, there were regional differences and in the regions where the weather was colder than normal, the demand for natural gas was higher; in the West the temperatures were lower than normal.
The high crude oil prices might have also contributed to the rise of natural gas prices in 2011; natural gas might serve as substitute for heating oil such as propane, for heating purposes in the industrial and residential sectors.
Prices for the week ending April 29th
Natural gas prices 2011 (Henry Hub) rose from beginning to end of the week by 2.97% and reached 4.5$/mmbtu on Friday; Its average daily change was 0.78%, and its weekly average was 2.72% above the previous week’s average price.
The Nymex Henry Hub Future Price (May delivery) inclined by 7.09% during the week, and its average price was 4.92% above last week’s average price.
In total, natural gas prices, production, consumption and storage rose, while imports fell during the week ending on April 29th.
For further reading:
- Natural gas storage rose for third week | EIA review, April 29
- Natural gas storage rose for second week | EIA review, April 22
- Natural gas storage finished the week on a rise | EIA review, April 15