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Weekly Natural Gas Report -- 11/15/2012

November 15, 2012
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

The NYMEX December 2012 contract ended the week up, rising from $3.578 per MMBtu last Wednesday to $3.760 per MMBtu yesterday, an increase of 18.2 cents per MMBtu. Prices dropped early in the report week, falling to $3.503 per MMBtu on Friday, but rose for the balance of the period to finish the week up 5.1%.

The 12-Month Strip (average of December 2012 to November 2013 contracts) closed yesterday at $3.914 per MMBtu, up 15.4 cents per MMBtu (4.1%) for the week.

Certain locations in the Northeast saw prices initially trending significantly lower as much warmer weather followed a Nor’easter that drove temperatures into the thirties early in the reporting week. At the Algonquin Citygate trading point (for delivery into Boston), spot prices started the week at $8.45 per MMBtu, but dropped to $4.52 per MMBtu on Friday before regaining considerable ground on Tuesday and Wednesday, closing at $7.37 per MMBtu -- down 12.8% for the week. Similarly, prices at the Transcontinental Pipeline’s Zone 6 trading point (which serves New York City markets), began the week at $4.04 per MMBtu, fell to $3.43 per MMBtu on Friday and then rose steadily to finish the report week essentially unchanged at $4.03 per MMBtu down 0.2%.

Front-month December natural gas contract trended sideways through the morning before tailspinning 11 cents to the low. A nearly immediate correction found nattie back on the upside at $3.83 at high noon -- before falling sharply right back to the low, testing key support at the close at $3.70, down six cents on the day.

There is plenty of room to the downside. If support at $3.69 is violated, look for front-month nattie to continue to explore the downside.

Henry Hub spot price price registered an overall increase for the week, dipping a combined 14 cents per MMBtu on Thursday and Friday, before climbing to close the week at $3.66 per MMBtu, up 5.5%. Generally moderate temperatures in many locations helped to lower prices early in the reporting week, with prices finishing the week higher ahead of forecasts of colder weather.

Demand/Consumption --

Total consumption for the report week registered an overall increase, with higher residential/commercial demand offsetting a decrease in demand from the power and industrial sectors. According to estimates from Bentek, domestic natural gas consumption rose by 0.4% from last week, driven by an increase of 2.8% in residential/commercial sector consumption.

Power sector consumption finished the week down 2.3%, while industrial sector consumption dipped modestly -- down 0.5%. -week, Residential/commercial sector consumption, higher week-over, exceeding levels for the same week last year -- by 14.1%.

Supply --

Total supply was down for the week, registering an overall decrease of 0.8%, largely reflecting slightly lower dry natural gas production. According to Bentek estimates, domestic weekly dry natural gas production declined 0.4% from the previous week’s volumes -- yet was 1.8% higher than the same period last year. Imports from Canada declined by 6.4%, as a decrease in shipments to the Midwest offset increases in the West and Northeast. For the week, imports from Canada stand moderately below year-ago volumes -- down 3.4%. While liquefied natural gas (LNG) sendout rose 0.8% over last week, sendout volumes remain 37.6% below year-ago levels.

Storage --

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