Natural Gas Report: Net Injections Drive Futures Lower

May 16, 2013 10:24 AM

Pricing --

June 13 natural gas opened today $4.095 and fell sharply on news of strong net injections to storage to a low of $3.912. From there, the contract spent the rest of the day moving sideways to end at $3.935.

A move below $3.91 would signal strong downside potential, but nattie hung up just above that critical line of support. If this contract finds its way lower, we may advise to book some natural gas for fall grain drying.

According to EIA, spot and futures prices generally increased during the report week. The Henry Hub price rose 17 cents from $3.86 per MMBtu last Wednesday to $4.03 per MMBtu yesterday, reversing some of the 40 cent loss posted last week. Prices oscillated through the week with ups and downs of a few cents, before rising 10 cents from $3.93 to $4.03 per MMBtu from Tuesday to Wednesday.

Price increases across the country, particularly those that occurred at the end of the report week, may have reflected warm temperatures and air-conditioning demand in parts of the country.

Consumption --

Total demand was relatively flat during the report week, with increases in power burn offsetting declines in residential, commercial, and industrial consumption. Consumption of natural gas for power generation increased 9.7 percent from last week, according to data from BENTEK Energy Services LLC.

Storage --

Working natural gas in storage increased to 1,964 Bcf as of Friday, May 10, according to EIA's WNGSR. This represents an implied net injection of 99 Bcf from the previous week. Both the 5-year average and year-ago stock changes for the week were implied net injections of 83 Bcf and 56 Bcf, respectively. Inventories are currently 26.1 percent less than last year at this time and 4.1 percent below the 5-year average of 2,047 Bcf.


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