Natural Gas Report: Natgas Trends Strongly Higher Despite Supply Build

October 11, 2013 04:54 AM
  • Inventories stand at 3,577 Billion cubic feet (Bcf) -- 3.7% below year-ago and 1.6% above the five-year average.
  • This week notes a 90 Bcf gain in storage, much larger than last year's 20 Bcf build during the same period.
  • Natural gas spot prices rose roughly a dime over the report week at most locations.
  • November '13 WTI crude opened today at $102.94 with the Brent/WTI spread firming this week to $7.09. 8a97f6e531bb7b67f2a7048e1378e941


November 13 natural gas opened today at $3.73 and has chopped violently higher since. Resistance slowed the uptrend at $3.778 and later, twice at $3.775. However, the uptrend is well established and if natgas can move higher amid news of strong additions to inventories, we expect this trend to continue near-term.

Prices --

Henry Hub spot prices firmed 9 cents to $3.70 during the Wed-Wed report week. Nymex prices firmed 13 cents to end the report week at $3.679. The 12-month strip (average of November 2013 to October 2014 contracts) gained 13 cents for the week, closing at $3.905 per MMBtu.

Consumption --

Consumption increased this week after three straight weeks of declines. Total consumption increased to an average of 56.5 Bcf/d, 3.3% above last week, according to data from Bentek Energy. Consumption was up across all sectors, including natural gas used for power generation (power burn). Power burn was up 3.0% this report week versus last, despite lower power burns east of the Rockies toward the end of the report week as milder weather moved in from the West. East of the Rockies, power burn this Wednesday was 19.1% lower than last Wednesday. However, the same weather front that brought cooler temperatures east of the Rockies, had already brought cold temperatures to the Pacific Northwest and the Rockies and likely contributed to higher residential/commercial consumption during the later part of the report week. Total residential/commercial consumption for the country was 31.3% higher this Wednesday versus last Wednesday, EIA said.

Storage -- chart

Working natural gas in storage increased to 3,577 Bcf as of Friday, October 4. The 90-Bcf gain in storage levels was significantly larger than the 20-Bcf injection that occurred during the same week in 2012 and larger than the 5-year average increase of 84 Bcf. Current inventories are 138 Bcf (3.7%) less than last year at this time, but 55 Bcf (1.6%) above the 5-year (2008-12) average of 3,522 Bcf, according to EIA.

Data, graph and indicated text provided by EIA.

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