U.S. Energy Information Administration (EIA) projects working inventories of natural gas in storage will end the heating season at levels significantly lower than last year. This month’s Short-Term Energy Outlook projects that at the end of March, inventories will total 1,959 billion cubic feet (Bcf), which is lower than last year’s record high level but still greater than recent years.
Last year at the end of March working inventories totaled 2,477 Bcf, which was the result of robust natural gas production combined with low demand from a warm winter. For much of this winter heating season, inventories have remained greater than the five-year ( 2008-2012) average and below the previous year’s levels.
Natural gas prices at major trading hubs increased moderately for the report week. Henry Hub prices increased from $3.57 per million British thermal units (MMBtu) Wednesday (3/6) to $3.72 per MMBtu Wednesday this week (3/13), while natural gas prices at Algonquin Citygate, for delivery into Boston increased from $7.77 per MMBtu to $8.69 per MMBtu.
The April 2013 New York Mercantile Exchange natural gas contract trended higher throughout the entire week this week opening Monday (3/11) at $3.64. Currently (10amCT) just above $3.90 and threatening to move closer to psychological resistance at $4.00. A move to $4.00 could set off a round of selling and may signal bearish movement ahead, once a fresh high is in place.
The 12-Month Strip (average of April 2013 to March 2014 contracts) gained 16 cents per MMBtu, starting at $3.761 per MMBtu last Wednesday and landing at $3.916 per MMBtu yesterday.
According to estimates from BENTEK Energy Services LLC, average natural gas consumption for the nation fell this report week by 11.5 percent over last week’s daily average. Natural gas consumption decreased in all sectors and most notably in the residential/commercial and power sectors, which fell by 15.7 and 12.7 percent, respectively, for the report week. This is the result of warmer weather in most parts of the country compared with the previous week.
Working natural gas in storage declined to 1,938 Bcf as of Friday, March 8, according to EIA’s Weekly Natural Gas Storage Report (WNGSR). An implied storage withdrawal of 145 Bcf for the week moved storage levels 440 Bcf below year-ago levels, and 198 Bcf above the 5-year average.