The recent heat wave in the Northeast is probably among the main reasons for the recent rally in natural gas prices.
Here is a summary of the recent U.S natural gas market EIA report regarding the week ending on June 3rd:
Natural gas Storage
The underground natural gas storage (Billion Cubic Feet) continues to stock up as it inclined for the ninth straight week, last week by 3.8% or by 80 Bcf; as a result, the natural gas storage rose to 2.187 billion cubic feet for all lower 48 states; the natural gas storage is still 2.6% below the 5-year average, and 10.4% below the storage level during the same week in 2010.
This rise in storage was primarily due to a 49 Bcf injection into the Eastern Consuming Region natural gas storage.
The chart below presents the natural gas storage (weekly figures) and Henry Hub natural gas prices during 2011; the chart shows the rise in natural gas spot prices despite the rise in NG storage.
The natural gas consumption inclined mainly in the Northeast, despite the drop in consumption in other area across the U.S. such as Midwest. During March, U.S. natural gas consumption fell by 9.6% compared with February’s, but was higher by 2.4% compared with March 2010 consumption. According to the recent EIA yearly outlook report, consumption in 2011 is expected to be 67.1 Bcf, as the electric power generation and industrial sectors will lead the growth in consumption.
Production and Imports
The U.S. natural gas supply remained high, but the production fell by less than half a percent at an average above 64 Bcf/d.
The imports of natural gas from Canada inclined to the Northeast but fell to other regions such as the West and Midwest; the rise in imports from Canada and increase in flow from Southeast to the Northeast are among the contributing factors for the rise in natural gas prices in the Northeast.
According to the report the natural gas rig count inclined by 6 during the week to reach 887.
The US temperatures continued to incline and reached a weekly average of 69.9 degrees, which were 3.3 degrees warmer than the five year average for the week ending on June 2nd, but were slightly cooler than last year by 1.3 degrees.
Prices for the week ending June 3rd
Natural gas spot price (Henry Hub) inclined during that week by 1.94% and reached to an average price of 4.65$/mmbtu; its average daily change was 2.03%, and its weekly average was 6.99% above the previous week’s average price.
The Nymex Henry Hub Future Price (July delivery) also inclined by 0.94% during that week, and its average price was 7.27% below last week’s average price.
For further reading:
- Natural gas market continues its comeback – June 3
- Is the natural gas market making a comeback? – May 27