Natural Gas Report: Natural Gas Hits Five-year High

February 21, 2014 08:16 AM


More than half of the nation's homes are heated with natural gas. Front month natural gas jumped this week to highs not seen since 2009. The National Weather Service has forecast the return of the Polar Vortex and a cool spring. Imports from Canada fell way off during the report week and the 1.0 billion cubic feet per day (Bcf/d) that didn't migrate south contributed to storage numbers already well into several weeks of strong declines.

Another round of winter weather late this week and predicted cooler temperatures next week will keep withdrawals hopping and the added demand will limit downside price action until stocks can rebuild.

To the good, dry gas production increased in the United States during the report week by 0.9 Bcf/d, but declines in imports from Canada offset the increase.

  • Inventories stand at 1,443 Billion cubic feet (Bcf) -- 40.3% below year-ago and 33.9% below the five-year average.
  • This week notes a 250 Bcf net withdrawal from storage.
  • Troublesome winter weather in the Midwest this week will guarantee another big withdrawal in next week's report.


March '14 natural gas opened today at $6.06 3/4 -- $1.24 3/4 above last week's Natgas Report, reaching a high earlier today at at $6.30 3/4. Bulls will target $6.55 and 6.69 on their way to retrace back to the 2008 high of $13.37 1/2 with tough support at $3.95.

The average temperature in the continental United States during the report week was 27.3°F -- 10.9°F cooler than the same time last year and 8.4°F below the 30-year average temp.

Prices --

Natural gas spot prices moved in different directions at different trading locations during the report week. The Henry Hub spot price closed down at $5.97 per million British thermal units (MMBtu) on Wednesday, February 19, 18 cents/MMBtu below the $6.15/MMBtu spot price on Wednesday, February 12. At the New York Mercantile Exchange (Nymex), the March 2014 futures price increased from $4.822/MMBtu last Wednesday to $6.149/MMBtu this Wednesday, the highest front-month contract price in more than four years, according to EIA.

Consumption --

Demand for natural gas fell this week across all sectors. Total consumption of natural gas fell to 87.5 Bcf/d, 24% below last week's average of 112.8 Bcf/d, and 3% below the average for the same days in 2013. The decline in demand began last week, after consumption peaked at 125.0 Bcf/d on Thursday, February 6, as the impact of cold weather on that date dissipated. The decline continued through Wednesday, Feb. 19, when consumption fell to 73.7 Bcf/d.

The largest drop in consumption came from the residential and commercial sector, which fell week-on-week by 18.9 Bcf/d (29.6%), to 44.9 Bcf/d. Natural gas consumption in the power sector (power burn) fell by 6.4 Bcf/d (27.4%) below week-ago levels, to 16.8 Bcf/d. Industrial consumption decreased by 1.0 Bcf/d (4.4%), and natural gas exports to Mexico dipped by 2.9%, according to EIA.

Indicated text provided by EIA.

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