Natural Gas Report: Cooler Weather Limits Stock Build

October 31, 2013 09:20 AM
 

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  • Inventories stand at 3,741 Billion cubic feet (Bcf) -- 3.1% below year-ago and 1.6% above the five-year average.
  • This week notes a 38 Bcf gain in storage, much larger than last year's -3.1 Bcf build during the same period last year.
  • Natural gas spot prices rose over the report week at most locations as cool weather slinks across the nation.
  • December '13 WTI crude opened today at $96.62 with the Brent/WTI spread widening $2.58 this week to $13.18.

 

December 13 natural gas opened today at $3.638 and and moved generally sideways as the news of the 38 Bcf storage build did little to move the market one way or the other. The contract tested support at August 9's $3.56 and quickly moved back higher to the range it maintained for the rest of the day. A violation of $3.56 would open the door to the August 2013 low of $3.469 and beyond that, $3.15 from February. The next resistance hurdle will be pivots around $3.91 and above that $4.00.

Delivery constraints continue to plague LP. Hours of Service Waivers are in place in several Midwestern states, particularly in the north. Some of these waivers will be in place until Thanksgiving.

Cooler temperatures across the lower 48 resulted in a build that was above expectations, but relatively small at just 38 Bcf. Average temperatures in the continental United States were 1.9 degrees cooler than the same time last year and 1.9 degrees below the 30-year average.

Prices --

The Henry Hub spot price fell by 11 cents to $3.55/MMBtu yesterday from $3.66 last Wednesday. Price points at hubs supplying gas to large metropolitan areas saw the largest decreases. Transco Zone 6 New York, delivering to New York City, fell by 33 cents per MMBtu, from $3.95/ MMBtu last Wednesday to $3.62/MMBtu yesterday. Chicago Citygate fell by 20 cents per MMBtu, from $3.93 last Wednesday to $3.73/ MMBtu yesterday. Much of this price decline occurred between Monday and Tuesday, according to EIA.

Consumption --20131024 Supply

Consumption increased by 4.9% from the previous week, largely because of a 14.1% increase in residential and commercial consumption, according to data from Bentek Energy. This rise in space heating demand was the result of colder weather in the Northeast and Midwest. During the report week, natural gas consumption for power generation fell by 1.2%. As the season for air conditioning nears an end, almost every region consumed less gas for power generation, with the exception of Texas. Texas consumed 25.1% more gas in the electric sector on warm weather earlier in the week, EIA said.

Industrial sector gas consumption was up slightly, increasing by 0.6%, and U.S. natural gas exports to Mexico increased substantially, rising by 16.9% over last week.

Storage --

Working natural gas in storage rose to 3,779 Bcf as of October 25. The 38-Bcf gain in storage levels was significantly smaller than both the 66-Bcf injection that occurred during the same week in 2012 and the 5-year average increase of 57 Bcf. Current inventories are 120 Bcf (3.1%) less than last year at this time, but 58 Bcf (1.6%) above the 5-year (2008-12) average of 3,721 Bcf, according to EIA.



Data, supply graph and indicated text provided by EIA.

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