Weekly Natural Gas Report -- 10/17/12

October 19, 2012 03:00 AM

The NYMEX November 2012 front-month natural gas contract has had a wild week but when all was said and done, remained essentially unchanged at $3.470 shedding only $0.005 week-over.

Henry Hub spot price two cents lower week-over at $3.24. Henry Hub spot price had been as high as $3.38 during the reporting week. The 12-month strip gained 0.018 cents to end the reporting period at $3.908. The natural gas rotary rig count, as reported by Baker Hughes Incorporated, declined by 15 rigs to 422 active units as of Friday, October 12.

Demand/Consumption --

Overall natural gas consumption dropped by 4%, as declines occurred in most major consuming sectors. Consumption of natural gas for electric power generation fell 2.7%, while residential and commercial use declined 9.5% due to weather-related declines in demand. Consumption increased by 0.2% in the industrial sector.

Supply --

Total natural gas supply declined slightly this week, according to data from Bentek. Dry production declined by 0.2% and imports from Canada fell 5.2%. Liquefied natural gas (LNG) imports increased 12.7% this week, but averaged 220 million cubic feet per day, remaining a very small portion of the United States’ total supply.

Storage --

All three storage regions posted increases this week. Inventories in the East, West, and Producing regions increased by 24 Bcf (the 5-year average net injection is 40 Bcf), 8 Bcf (the 5-year average net injection is 6 Bcf), and 19 Bcf (the 5-year average net injection is 24 Bcf), respectively. In the Producing region, working natural gas inventories increased 11 Bcf (4.2 percent) in salt cavern facilities and increased 8 Bcf (0.8 percent) in nonsalt cavern facilities.

Weather --

Temperatures during the storage report week were 4.6 degrees cooler than the 30-year normal temperature and 7.4 degrees cooler than the same period last year. Temperatures in the lower 48 States averaged 55.0 degrees, compared to 62.4 last year and the 30-year normal of 59.6 degrees. During the week, all but one of the Census divisions were cooler than the 30-year normal, particularly the West North Central and East North Central Census divisions in the Midwest, which averaged 11.1 and 8.6 degrees, respectively, cooler than the 30-year normal. In the Northeast, the New England Census division was relatively warm, averaging about a degree warmer than the 30-year normal. Heating degree-days nationwide were 50% above normal and 153% above last year.



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