Natural Gas Report: Natural Gas Tests Highs

December 19, 2013 09:09 AM


  • Inventories stand at 3,248 Billion cubic feet (Bcf) -- 13.1% below year-ago and 7.4% below the five-year average.
  • This week notes an 285 Bcf net withdraw from storage marking another larger weekly draw than was expected -- 215 Bcf larger than the draw at the same time last year.
  • Frigid temperatures and strong export sendouts limited injections to storage.


January 14 natural gas opened today at $4.27 and broke through resistance at April 29's $4.444. Above that, bulls will target the June 2010 high of $5.19. Next resistance lies all the way back in July 2011 at $4.98. A downside breech of $4.00 would signal downside risk to $3.91 and below that, $3.62.

The average temperature in the continental United States during the report week was 29.3°F -- 15.1°F cooler than the same time last year and 9.1°F below the 30-year average temp.

"On Monday, EIA published its base case version of its 2014 Annual Energy Outlook (AEO2014). EIA predicted that natural gas production will rise steadily throughout the forecast period, reaching 37.5 trillion cubic feet (Tcf) per year by 2040, an increase of 56% over 2012 levels. Shale gas production is expected to double, reaching 53% of all produced volumes by 2040, up from 40% in 2012. As with overall gas production, production from shale plays is higher than in AEO2013 because of an updated, more localized assessment of well recovery and decline rates. Natural gas from tight formations continues to be an important source of supply, as well. Total domestic natural gas consumption is projected to grow by 6.0 Tcf from 2012 to 2040, when it would equal 44% of the 13.5 Tcf increase in U.S. production," according to EIA

Prices --

The Henry Hub spot price rose 2 cents from $4.24 MMBtu last Wednesday to $4.26/MMbtu yesterday (Wednesday). However, prices continue to threaten a bullish attitude and as an icy mix makes its way across the nation tonight and again later this weekend, prices are likely to remain elevated.

Consumption --

Consumption actually declined 8.8% from the previous week, led by a 58% decrease in electric sector demand in Texas and a 34% Mid-continent decline.

Storage --

Working natural gas in storage fell to 3,248 Billion cubic feet. The 285 Bcf net decline in storage levels comes on the heels of the largest net November decline EIA has noted since 1994.

According to EIA, "The net withdrawal reported this week was 285 Bcf. The previous record withdrawal was 274 Bcf in January 2008. The previously largest recorded December withdrawal was 208 Bcf, in December 2000. December withdrawals have averaged 109 Bcf per week since 2008. This week’s withdrawal is 215 Bcf larger than last year’s withdrawal of 70 Bcf and 152 Bcf larger than the 5-year average withdrawal of 133 Bcf. Current inventories totaling 3,248 Bcf are 488 Bcf (13.1%) less than last year at this time, and 261 Bcf (7.4%) below the 5-year (2008-12) average."

Data & indicated text provided by EIA.

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