Natural Gas Report: Storage Build Spurs Setback

September 27, 2013 03:16 AM


  • Inventories stand at 179 Billion cubic feet (Bcf) -- 5.0% -- below year-ago and 30 Bcf -- 0.9% -- above the 5-year average of 3,356 Bcf..
  • This week notes a larger-than-expected build in total U.S. natural gas supplies.
  • Natural gas prices decreased over the report week at most locations.
  • October '13 WTI crude opens this Friday at $102.91 with the Brent/WTI spread widening to $6.17. natgas9 27


October 13 natural gas opened today at $3.581 after bouncing off a setback Thursday morning that pressured the contract to $3.45. WTI crude pricing is widening the gap between itself and Brent and that move is a suggestion of higher natgas pricing ahead. Predictions for a wet harvest are still out there, but as corn prices lag, growers will look to take advantage of available bin space. Each of these potential outcomes points toward increased dryer fuel use. If you have not yet booked fuel for dryers, natgas has provided a marginal setback, and LP this week is 12 1/4 cents below year-ago pricing.

  • Next resistance lies at the July 24 daily high at 3.796 and $3.84. A violation of that level would indicate upside potential to Mid-July's $3.844. Beyond that, look for a return to pivots around $3.91.
  • Support lies at the August 8 daily low of $3.281 and layered down to $3.15.


Prices --

Henry Hub spot prices softened from $3.71 to $3.52 during the Wed-Wed report week. Nymex prices followed suit. The October contract softened 22 cents to end the report week at $3.493. The twelve month strip rounds out the hat trick of declines, shedding 18 3/4 cents from $3.937/MMBtu to $3.75.

Consumption --

According to data from Bentek Energy LLC, total consumption fell 5.6%, driven by a steep decrease in consumption for power generation in every region of the country. With weather moderating, air conditioning loads have dropped off. Consumption of gas for power generation in the Southeast, Texas, and the Northeast, the three largest consumers of natural gas in this sector, decreased by 12.1%, 25.7%, and 12.5%, respectively.storybox

Industrial and residential/commercial demand both increased, rising by 1.0% and 2.7%, respectively.

Storage --

Working natural gas in storage increased to 3,386 Bcf as of Friday, September 20. The 87-Bcf gain in storage levels was larger than both the 79-Bcf injection that occurred during the same week in 2012 and the 5-year average increase of 75 Bcf, according to EIA.


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