Weekly Natural Gas Report -- 11/01/2012

November 1, 2012 10:23 AM

The NYMEX December 2012 contract moves to the front-month position this week. On Monday, the November contract expired at $3.471 per MMBtu, about 7 cents per MMBtu higher than the Henry Hub spot price. The 12-month strip (average of December 2012 to November 2013 contracts) fell slightly, starting at $3.861 per MMBtu last Wednesday and landing at $3.851 per MMBtu yesterday.

As of the close today, front-month December natural gas contract trending lower after steep declines on Tuesday -- ranging today between 3.65 and 3.74, ending the day one-tenth of a point lower at 3.68.

Henry Hub spot price rose from $3.43 per MMBtu last Wednesday to $3.50 per MMBtu yesterday after falling to $3.38 on October 26. At the Algonquin Citygate, which serves consumers in Boston, prices rose 28 cents per MMBtu to end the week at $4.18 per MMBtu. Some of the price increases in the Northeast may have been related to storm damage; Texas Eastern Transmission reported compressor problems as a result of Hurricane Sandy, according to trade press reports.

Demand/Consumption --

Total demand increased this report week, led by higher residential/commercial consumption. According to estimates from Bentek, average natural gas consumption for the nation rose this report week by 5.5 Bcf per day (9.1 percent) over the last week’s daily average. The rise resulted principally from a 5.7 Bcf per day (34.8 percent) week-over increase in average residential/commercial consumption.

Average residential/commercial consumption began the week on Thursday, October 25 at 16.4 Bcf per day, jumping to 20.6 Bcf per day on Friday, October 26. It rose steadily to 24.3 Bcf per day on Tuesday, October 30, and ended the week yesterday at 23.1 Bcf per day.

By contrast, average daily power sector consumption fell this week in all regions of the country except for the Midwest and Southwest, where consumption rose (16.9 percent and 2.6 percent, respectively). Double-digit percentage declines in natural gas power burn occurred in the Pacific Northwest (10.4 percent), Texas (14.8 percent), and Midcontinent (10.1 percent).

Supply --

Bentek estimates that average natural gas supply for this report week rose by 1.1 Bcf per day (1.5 percent) over last week. This resulted from a 0.7 Bcf per day (1.1 percent) increase in dry production, and a 0.3 Bcf per day (6.5 percent) increase in imports from Canada.

Storage --

Working natural gas in storage increased to 3,908 Bcf as of Friday, October 26, according to EIA’s WNGSR, the highest recorded volume since EIA began keeping records. This represents an implied net injection of 65 Bcf from the previous week. This week’s injection was 8 Bcf above the 5-year (2007-2011) average injection of 57 Bcf, and 17 Bcf below last year’s injection of 82 Bcf. Inventories are currently 136 Bcf (3.6 percent) greater than last year at this time and 259 Bcf (7.1 percent) greater than the 5-year average.

All three storage regions posted increases this week, with the Producing and West Regions posting record high natural gas storage volumes. Inventories in the East, West, and Producing regions increased by 34 Bcf (the 5-year average net injection is 29 Bcf), 8 Bcf (the 5-year average net injection is 6 Bcf), and 23 Bcf (the 5-year average net injection is 22 Bcf), respectively. In the Producing region, working natural gas inventories increased 14 Bcf (4.9 percent) in salt cavern facilities and increased 10 Bcf (1.0 percent) in nonsalt cavern facilities.



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