The NYMEX December 2012 futures contract decreased by 3.1 percent from $3.691 per MMBtu last Wednesday to $3.578 per MMBtu yesterday. The 12-Month Strip (average of December 2012 to November 2013 contracts) decreased by 2.4 percent over the same period, from $3.851 per MMBtu last Wednesday to $3.760 per MMBtu yesterday.
Currently (9:30am CT) front-month December natural gas contract at $3.55 after opening the day today at $3.59. Ranges seem to widen farther each day -- yesterday saw Dec nattie range from $3.52 to $3.62. These sudden fits are nothing new for December natural gas futures and with demonstrated 10 point ranges in its back pocket, look for these fits to continue. Over this week, solid tops are in at $3.615 and support is strong at $3.52 -- but expect Dec nattie to test both ends.
Natural gas prices increased over the report week at most spot market locations. For example, at the Sumas (Northwest Washington), SoCal (Southern California), Transco Zone 6 New York (New York City), and Algonquin Citygate (Boston) trading points, spot prices increased between $0.23 and $4.27 per MMBtu for the week, with the largest increases occurring in the Northeast. The price increases were driven by a combination of colder-than-normal temperatures, pipeline constraints, and relatively low Northeast LNG imports.
Total consumption for the report week registered an increase, driven by a significant increase in residential/commercial consumption. According to estimates from BENTEK Energy LLC, average domestic natural gas consumption rose by 7.5 percent from last week’s daily average. The rise resulted principally from a 22.8 percent week-on-week increase in average residential/commercial consumption. Bentek also estimated a slight increase for industrial consumption. Together, these increases far exceeded the 3.7 percent drop in power sector consumption from last week’s daily average.
Total supply for the report week decreased, driven by declines in domestic production and imports from Canada. Bentek estimates that average daily natural gas supply for this report week decreased by 0.7 Bcf per day (0.9 percent) over the previous week’s daily average. This resulted from a 0.5 percent decrease in dry production and a 7.8 percent decrease in imports from Canada.
Working natural gas in storage increased to 3,929 Bcf as of Friday, November 2, according to EIA’s WNGSR, the highest recorded volume since EIA began keeping records. This represents an implied net injection of 21 Bcf from the previous week. This week’s injection was 15 Bcf below the 5-year (2007-2011) average injection of 36 Bcf, and 27 Bcf below last year’s injection of 48 Bcf. Inventories are currently 109 Bcf (2.9 percent) greater than last year at this time and 244 Bcf (6.6 percent) greater than the 5-year average.
All three storage regions posted increases this week, with the Producing and West Regions posting record-high natural gas storage volumes. Inventories in the East, West, and Producing regions increased by 5 Bcf (the 5-year average net injection is 16 Bcf), 8 Bcf (the 5-year average net injection is 6 Bcf), and 8 Bcf (the 5-year average net injection is 14 Bcf), respectively. In the Producing region, working natural gas inventories increased 7 Bcf (2.3 percent) in salt cavern facilities and decreased 1 Bcf (0.1 percent) in nonsalt cavern facilities.