Natural Gas Report: Highest Weekly Injection Since October 2011

June 6, 2013 10:00 AM

Pricing --natgas

The July 13 natural gas contract opened today at $3.99 and struck $4 before moving dramatically lower -- ending the day 14 cents lower at $3.85.

We have advised a violation of support at $3.91 would signal an opportunity to book fall needs for grain dryers and with current pricing at $3.85, in wake of nattie's tendency to takeoff to the upside with little warning, conditions are right to book up to 50% or more of fall natgas needs.

Resistance was tough at $4.00 even this morning. a violation of that level would signal upside potential to $4.10. Support lies at March 11's low of $3.59. A move below that level would signal downside potential with stops at each dime along the way.

Spot Prices --

According to EIA, Natural gas spot prices declined this week. The Henry Hub spot price began the report week on Wednesday, May 29 at $4.15 per MMBtu, and declined to $3.99 per MMBtu on Wednesday, June 5, amid cooler than normal temperatures for most of the country.

Most other major trading hubs also saw prices decline by 10-20 cents per MMBtu for the report week.

Consumption --

Total demand increased week-on-week, but decreased during the report week. According to Bentek Energy Services LLC estimates, overall natural gas consumption in the United States increased by 3.5%, or 1.9 Bcf/d, over last week’s daily average.

Industrial consumption decreased by 1.6% week-on-week, while exports to Mexico increased by 3.2%.

Storage --

This week’s net injection of 111 Bcf is the highest weekly net injection since October 2011.

Working natural gas in storage increased to 2,252 Bcf as of Friday, May 31, according to EIA's WNGSR. The net injection was considerably higher than market expectations, which, on average, were reported to be 99 Bcf. All three storage regions posted increases this week.

Cooler spring temperatures during the storage report week supported this week’s net injection. Temperatures in the Lower 48 states were 1.1 degrees cooler than the 30-year normal temperature and 6.1 degrees cooler than the same period last year, and averaged 64.6 degrees, compared to 70.7 degrees last year and the 30-year normal of 65.7 degrees.


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