Natural gas prices increased moderately at most major trading hubs for the EIA report week (Wednesday to Wednesday) with the exception of the prices in the Northeast. Henry Hub prices increased from $4.07 per million British thermal units (MMBtu) last Wednesday to $4.24 per MMBtu yesterday.
May 13 natural gas opened today $4.170 after spiking above $4.40 late last week. The contract moved slightly lower on Wednesday (4/24) on news of a second consecutive week of net injections to storage. Winter's last blast opened the upside to the contract, allowing for the Friday spike, but the forecast calls for a dramatic warm-up, limiting upside action at present.
Based on the technicals, we expect May '13 natural gas to continue to trail. Next support lies at $4.16. A violation of that level would signal downside potential to $4.10, but this contract has made ten cent-plus moves on a regular basis. Warming temperatures coupled with net injections to storage suggest bearish movement ahead.
According to estimates from Bentek, average natural gas consumption for the nation rose this report week by 1.6 percent over last week’s daily average. Natural gas consumption increased in the residential/commercial and power sectors by 0.8 and 4.5 percent, respectively, for the report week. Natural gas consumption in the industrial sector decreased modestly by 0.1 percent.
Dry natural gas imports from Canada increased by 10 percent from the previous week and offset the decrease in U.S. dry natural gas production. Average U.S. dry natural gas production decreased by 0.2 percent from the previous week to 64.5 Bcf per day.
Working natural gas in storage registered its first net injection for the season, increasing to 1,704 Bcf as of Friday, April 12, according to EIA's WNGSR. This represents an implied net injection of 31 Bcf from the previous week. Both the 5-year average and year-ago registered net injections of 39 Bcf and 21 Bcf, respectively. Inventories are currently 794 Bcf -- 31.8% -- less than last year at this time and 74 Bcf -- 4.2% -- below the 5-year average of 1,778 Bcf.