Natural Gas Report: Natgas Coils to Spring

September 19, 2013 09:15 AM

  • Colorado Oil and Gas Association reported Tuesday that 1,900 oil and natural gas wells had been shut in because of floods.
  • Residential and commercial natgas consumption up 20.9% week-over.
  • October '13 WTI crude $1.68 lower as of midday today with the Brent/WTI spread at $2.40.


October 13 natural gas opened today at $3.729 trending higher off the Sept. 6 daily low of $3.517. This week's natural gas report betrays a number of elements of upside potential including the advent of the winter heating season in select areas, massive production outages in Colorado and the failure of WTI to build war premium into crude pricing.natgas9 19

Next resistance lies at the July 24 daily high at $3.796 and $3.84. A violation of that level would indicate upside potential to Mid-July's $3.844. Beyond that, look for a return to pivots around $3.91.

Support lies at the Sept. 6 daily low of $3.517 and layered heavily down to $3.15. We do not see much that would send natgas futures lower at present

Prices --

Henry Hub spot prices rose from $3.60 last Wednesday to $3.71 yesterday. Nymex prices followed suit. The October contract added 14 cents to end the report week at $3.713. The twelve month strip firmed from $3.805/MMBtu to $3.937.

Consumption --

Consumption declined during the report week and Bentek Energy reports the total natural gas supply fell by 0.8%, due in part to flooded natgas fields in Colorado and a 300 million cubic feet per day production cut. Pipeline imports from Canada also faded 3.5% and LNG imports were steady. But as some areas of the nation start to cool ahead of winter, residential and commercial consumption rose 20.9% signaling the demand ramp up for winter may already be underway.

Storage --

Working natural gas in storage increased to 3,299 Bcf as of Friday, September 13, according to EIA's WNGSR. The 46 Bcf gain in storage levels was smaller than the expected 56 Bcf and significantly below the five-year average increase of 74 Bcf.


Current U.S. supplies of natural gas lie 187 Bcf -- 5.4% -- below the same time last year but are 18 Bcf -- 0.5% -- above the five year average.




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