Natural Gas Report: Natural Gas Prices Spike

January 30, 2014 10:00 AM
 

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"Natural Gas Liquids (NGL) prices were up [on the week]. The Mont Belvieu, Texas, natural gas liquids composite price rose to $12.56/MMBtu. Increases in the propane and ethane prices at Mont Belvieu drove this change. Bentek Energy noted that the increase in ethane prices was likely the result of a rise in the natural gas price, as well as propane-to-ethane switching in the industrial sector (industrial consumers using ethane as a feedstock because it is cheaper than propane). While propane prices rose at Mont Belvieu, increases at Conway, Kansas (the other major NGL trading hub) have been much more dramatic. Cold weather demand for propane from residential and commercial consumers have driven prices up at both locations. However, additional factors, such as increased propane demand for crop drying, and reduced ethane and propane deliveries from Canada on the Cochin Pipeline, led to low storage levels at Conway, making the weather-driven prices spikes there especially severe," according to EIA.index

  • Inventories stand at 2,193 Billion cubic feet (Bcf) -- 22.5% below year-ago and 16.6% below the five-year average.
  • This week notes a 230 Bcf net withdraw from storage.
  • Frigid temperatures in the Upper Midwest and ice and snow in the Southland worked together to drive demand higher.

 

March '14 natural gas opened today at $5.46 3/4. The contract has made runs at $5.48 twice and each time has been turned back. After a midday surge to $5.30 amid increased volume the contract softened and ended the day today at $4.91 3/4. That makes $4.86 fresh support with stops every six cents lower to strong support at $4.65. Bulls will target that $5.48 mark on their way to $6.00.

The average temperature in the continental United States during the report week was 31.4°F -- 2.7°F cooler than the same time last year and 1.7°F below the 30-year average temp.

Prices --

The Henry Hub spot price rose 11 cents from $4.44/MMbtu to $5.69/MMbtu on Monday -- the highest level since Feb. 2010 -- before moving lower to end the report week at $5.20. Icy, winter weather across the south contributed to the surge in natgas prices.

Consumption --

Total consumption rose 17.6% this week, as increased heating demand was reflected in a 23.4% week-on-week increase in residential and commercial consumption, and a 17.6% increase in power burn. Industrial consumption rose by 4.1%, according to EIA.



Graph and indicated text provided by EIA.

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