Natural Gas

Overview:

(For the Week Ending Wednesday, June 6, 2012)

• Natural gas prices generally registered minimal overall changes for the report week (Wednesday to Wednesday) at many of the country's trading locations. The Henry Hub price, which had dropped 15 cents by Friday, registered three consecutive daily increases to close at $2.41 per million British thermal units (MMBtu) yesterday (up 2 cents for the week).
• The natural gas futures market trended slightly higher over the week. At the New York Mercantile Exchange (NYMEX), the July 2012 natural gas contract gained 0.3 cents per MMBtu to close at $2.421 per MMBtu yesterday.
• Working natural gas in storage rose last week to 2,877 billion cubic feet (Bcf) as of Friday, June 1, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 62 Bcf for the week positioned storage volumes 713 Bcf above year-ago levels.
• The natural gas rotary rig count, as reported by Baker Hughes Incorporated on June 1, declined by 6 to 588 active units. Meanwhile, oil-directed rigs increased by 3 to 1,386 units.



more summary data

Prices:

The Henry Hub day-ahead price registered a modest increase for the week, dipping on Thursday and Friday before climbing on Monday and Tuesday, closing the week at $2.41 per MMBtu, up 0.8 percent. In the Northeast, cooler temperatures helped generate significant price increases earlier this week, with a return to more seasonal temperatures moderating end-of-week prices.

At the NYMEX, the July 2012 contract ended the week virtually unchanged, rising slightly from $2.418 per MMBtu last Wednesday to $2.421 per MMBtu yesterday, an increase of 0.1 percent. Prices dropped late last week, falling to $2.326 per MMBtu on Friday, but rose on Monday and Tuesday before retreating slightly yesterday. The 12-Month Strip (average of June 2012 to May 2013 contracts) closed yesterday at $2.999 per MMBtu, up 3.8 cents per MMBtu (1.3 percent) for the week.

Prices at many downstream trading locations registered overall declines, dropping on Thursday and Friday before gaining ground toward the end of the week. For example, spot prices at the Algonquin Citygate trading point for delivery into Boston, which started the week at $2.70 per MMBtu, fell to $2.31 per MMBtu on Friday and then rose for much of the remainder of the period to close yesterday at $2.57 per MMBtu (down 4.8 percent for the week). Similarly, prices at the Transcontinental Pipeline's Zone 6 trading point (which serves New York City markets) declined from $2.59 per MMBtu last Wednesday to $2.29 per MMBtu on Friday, then climbed to $2.54 per MMBtu by week's end (down 1.9 percent).

Total consumption for the report week registered an overall decline, with a decrease in power sector demand offsetting increases in other sectors. According to estimates from Bentek, domestic natural gas consumption fell by 2.8 percent from last week, driven by a decline of 10.1 percent in power sector consumption. Residential/commercial and industrial sector consumption ended the week up 9.3 percent and 1.3 percent, respectively. For all sectors, consumption exceeded levels for the same week last year.

Total supply for the week registered an overall decline of 1.3 percent, reflecting a similar drop in dry gas production. According to Bentek estimates, domestic weekly dry gas production was 1.3 percent lower than the previous week (although 2.6 percent above the same time last year). Imports from Canada also rose modestly (1.5 percent), with increases in shipments to the West and Midwest offsetting declines in the Northeast. For the week, imports from Canada stand 19.3 percent above year-ago volumes. Liquefied natural gas (LNG) sendout dropped sharply, down 32.7 percent from last week; sendout volumes remain well below (73.5 percent) year-ago levels.

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Storage

Working natural gas in storage increased to 2,877 Bcf as of Friday, June 1, according to EIA's WNGSR. This represents a net injection of 62 Bcf from the previous week. This week's injection was 37 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 81 Bcf. Working inventories are currently 713 Bcf (33 percent) greater than their year-ago levels and 687 Bcf (31 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 38 Bcf, 13 Bcf, and 11 Bcf, respectively. In the Producing Region, working natural gas inventories decreased 1 Bcf in salt cavern facilities and increased 12 Bcf in nonsalt cavern facilities.

Temperatures in the lower 48 States during the week ending May 31 were 4.7 degrees warmer than the 30-year normal temperature and 1.4 degrees warmer than the same period last year. The average temperature in the lower 48 States was 70.7 degrees, 4.7 degrees higher than the 30-year normal of 66.0 degrees. While overall temperatures were a few degrees warmer than normal, temperatures varied somewhat across Census Divisions. The Middle Atlantic and New England Regions in the Northeast were particularly warm, averaging 9.7 and 7.9 degrees, respectively, warmer than the 30-year normal. In the West, the average temperatures in the Pacific and Mountain Regions were both about a degree (1.4 and 1.0, respectively) cooler than the 30-year normal.

more storage data





See also:

• Natural Gas Analysis Reports
• Short-Term Energy Outlook