The NYMEX January 2013 Natural gas contract spent the week moving lower along a very choppy range. Fresh support established on Thursday at 3.29 has already been violated here on Friday morning at 3.27 signaling nattie futures may push higher by week's-end. But this is the third consecutive week of the January contract's slide to the lowside -- last Wednesday the contract was at 3.700 and by Wednesday of this week, futures had slid 31.8 cents and continued to fall.
The 12-Month Strip closed Wednesday December, 12 at $3.561 per MMBtu, down 26.2 cents per MMBtu (6.9 percent) – also its third straight week of declines and its largest drop yet this winter.
The Henry Hub day-ahead price registered an overall decrease for the second consecutive report week, declining by 8 cents per MMBtu. Henry Hub climbed up 7 cents to $3.48 per MMBtu last Thursday, before falling by 15 cents per MMBtu last Friday to $3.33 per MMBtu. By this Tuesday, it had climbed back to $3.39 per MMBtu, before falling back to $3.33 per MMBtu at the close of trading on Wednesday, likely due to generally higher-than-average temperatures in many locations.
Total consumption for the report week reversed last week’s decreases, returning to levels seen at the end of November. According to estimates from BENTEK Energy LLC (Bentek), domestic natural gas consumption rose by 14.5 percent from last week, driven by an increase of 28.7 percent in residential/commercial sector consumption. Power sector consumption rose by 7.0 percent, while industrial sector consumption finished the week up 2.0 percent.
Total supply decreased slightly for the report week, largely reflecting essentially flat dry natural gas production. According to Bentek estimates, domestic weekly dry natural gas production declined 0.7 percent from the previous week’s volumes. Imports from Canada rose by 1.3 percent, due to increases of 6.3 percent in the Midwest and 8.8 percent in the Northeast, which more than compensated for a 6.1 percent decrease in imports to the West. Liquefied natural gas (LNG) sendout rose 34.6 percent over last week, but remains at relatively low historical levels.
Working natural gas in storage increased to 3,806 Bcf as of Friday, December 7, according to EIA’s WNGSR. This represents an implied net injection of 2 Bcf from the previous week. This is in contrast to the net withdrawals of 113 Bcf and 79 Bcf, respectively, for both the 5-year (2007-2011) average and last year for the same report week.
Inventories are currently 48 Bcf (1.3 percent) greater than last year at this time and 283 Bcf (8.0 percent) greater than the 5-year average.
Two of the three storage regions posted increases this week. Inventories in the West and Producing regions increased by 2 Bcf (compared to the 5-year average net withdrawal of 14 Bcf) and 12 Bcf (compared to the 5-year average net withdrawal of 29 Bcf), respectively, while the East region posted a decline of 12 Bcf (the 5-year average net withdrawal of 70 Bcf). In the Producing region, working natural gas inventories increased 4 Bcf (1.3 percent) in salt cavern facilities and decreased 9 Bcf (0.9 percent) in nonsalt cavern facilities.