Natural Gas

Overview:

(For the Week Ending Wednesday, May 23, 2012)

• Natural gas prices, led by the futures market, advanced modestly in nearly all markets over the week. At the New York Mercantile Exchange (NYMEX), the June 2012 natural gas contract ended the week up 11.9 cents per million British thermal units (MMBtu) to close at $2.737 per MMBtu on May 23.
• The Henry Hub price followed the NYMEX lead, closing at $2.60 per MMBtu on May 23, up 10 cents per MMBtu for the week.
• Working natural gas in storage rose last week to 2,744 billion cubic feet (Bcf) as of Friday, May 18, according to EIA's Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 77 Bcf for the week positioned storage volumes 750 Bcf above year-ago levels.
• The natural gas rotary rig count, as reported by Baker Hughes Incorporated on May 18, rebounded by 2 to 600 active units. Meanwhile, oil-directed rigs increased by 10 to 1,382 units.



more summary data

Prices:

At the NYMEX, the June 2012 contract increased from $2.618 per MMBtu last Wednesday to $2.737 per MMBtu yesterday, an increase of 11.9 cents per MMBtu (4.5 percent) over the period. The June 2012 contract led the futures market upturn with a 4.5 percent rally on expectations that hotter weather (and greater consumption) was approaching and that weekly inventory builds seemed to be moderating compared to the five-year average. The 3-Month Strip (average of June-July-August contracts) followed suit with a 10.7 cent per MMBtu (4.0 percent) gain for the week.

Movement in the Henry Hub day-ahead price reflected a widespread increase in market prices in this week's cash market by rising 4.0 percent, from $2.50 per MMBtu the previous Wednesday to $2.60 per MMBtu yesterday. As the Spot Prices tab on the left shows, the Henry Hub cash price rose beginning last Thursday. During the same period, numerous other spot market pricing points exhibited similar gains and also held or increased slightly.

Nearly all downstream trading locations registered higher prices despite consumption dropping modestly this week. Spot prices at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, which started the week at $2.64 per MMBtu, gained $0.13 per MMBtu over the week (Wednesday to Wednesday) to close at $2.77 per MMBtu (up 4.9 percent). Over the same period, the Chicago citygate spot price registered a 5-cent per MMBtu price gain (from $2.57 per MMBtu last Wednesday), ending the week at $2.62 per MMBtu (up 1.9 percent).

In the midst of seasonal temperatures throughout the more-populated regions over the past week, total consumption decreased slightly. According to estimates from BENTEK Energy LLC (Bentek), domestic natural gas consumption fell by 0.9 percent from last week. The residential/commercial sector led the decrease, posting a 9.1 percent decline, and the industrial sector registered a 0.8 percent decrease. The power sector, however, showed a partially offsetting 3.5 percent week-over-week gain attributed to increased power burn in Texas and key regions including the Northeast, Southeast, Midcontinent, and Rockies.

Total supply was up slightly for the week despite flat dry gas production. According to Bentek estimates, the week's average total natural gas supply posted a 0.2 percent increase from last week's level, led by a 2.0 percent increase in imports from Canada, which averaged 5.1 Bcf per day over the period. Imports from Canada stand 9.2 percent above year-ago volumes for the same week. There was also a 10.9 percent increase in supply of liquefied natural gas (LNG) during the week, with sendout averaging 370 MMcf per day; however, sendout volumes remain 67.8 percent below year-ago levels. Anchoring these supply gains was another week of essentially flat domestic dry gas production which averaged 63.6 Bcf per day, unchanged from the previous week and 3.6 percent above this time last year.

more price data

Storage

Working natural gas in storage increased to 2,744 Bcf as of Friday, May 18, according to EIA's WNGSR. This represents a net injection of 77 Bcf from the previous week. This week's injection was 20 Bcf lower than the 5-year (2007-2011) average injection for the same week. During the same week last year, the implied net injection was 101 Bcf. Working inventories are currently 750 Bcf (38 percent) greater than their year-ago levels and 753 Bcf (38 percent) greater than the 5-year average.

All three storage regions posted increases this week. Inventories in the East, West, and Producing Regions increased by 45 Bcf, 13 Bcf, and 19 Bcf, respectively. In the Producing Region, working natural gas inventories increased 19 Bcf in salt cavern facilities and remained at the previous week's level in nonsalt cavern facilities.

Temperatures in the lower 48 States during the week ending May 17 were 2.6 degrees warmer than the 30-year normal temperature and 4.9 degrees warmer than the same period last year. The average temperature in the lower 48 States was 64.3 degrees, 2.6 degrees higher than the 30-year normal of 61.7 degrees. While overall temperatures were a few degrees warmer than normal, temperatures varied somewhat across Census Divisions. The Mountain and Pacific Regions in the West were relatively warm, averaging 5.1 and 4.7 degrees, respectively, warmer than the 30-year normal. In the South, the West South Central Region was 1.7 degrees cooler than the 30-year normal, while the South Atlantic and East South Central Regions were 2.1 and 0.9 degrees, respectively, warmer than the 30-year normal.

more storage data





See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook