Weekly Natural Gas Report -- 12/07/2012

December 7, 2012 09:21 AM

The NYMEX, January 2013 natural gas contract ended the week lower, dropping from $3.801 per MMBtu last Wednesday to $3.700 per MMBtu yesterday, a decrease of 10.1 cents per MMBtu. Prices fell for much of the report week before regaining more than 16 cents per MMBtu yesterday, finishing the week down 2.7 percent. The 12-Month Strip (average of January 2013 to December 2013 contracts) closed yesterday at $3.823 per MMBtu, down 3.2 cents per MMBtu (0.8 percent) for the week.

Certain locations in the Northeast saw prices initially trending significantly lower as very warm weather late in the report week followed seasonally colder temperatures. Prices rebounded toward the end of the week ahead of a return to colder weather.

As of the close today, front-month January 2013 natural gas contract trending sharply lower opening today at $3.64, finding upside resistance at $3.68 before softening to end 0.12 lower at $3.54.

The Henry Hub day-ahead price registered an overall decrease for the week, dropping 32 cents per MMBtu through Tuesday before regaining some ground yesterday to close the week at $3.41 per MMBtu, down 7.8 percent. Generally higher-than-average temperatures in many locations helped to lower prices early in the report week, with prices finishing the week higher in some locations ahead of forecasts of colder weather.

Demand/Consumption --

Total consumption for the report week registered an overall decrease, reflecting lower demand across all sectors. According to estimates from BENTEK Energy LLC (Bentek), domestic natural gas consumption fell by 11.9 percent from last week, driven by a decrease of 23.5 percent in residential/commercial sector consumption.

Industrial sector consumption finished the week down 2.1 percent, while power sector consumption dipped modestly (down 0.2 percent). Residential/commercial sector consumption trailed levels for the same week last year by a considerable margin (24.7 percent).

Supply --

Total supply was unchanged for the week, largely reflecting essentially flat dry natural gas production. According to Bentek estimates, domestic weekly dry natural gas production declined 0.6 percent from the previous week's volumes (while remaining 0.5 percent higher than the same period last year).

Imports from Canada rose by 7.4 percent, with all regions showing increased shipments, particularly the Midwest, up 25.1 percent. For the week, imports from Canada stand moderately below year-ago volumes (down 5.2 percent).

While liquefied natural gas (LNG) sendout rose 25.3 percent over last week, sendout volumes remain well below (62.6 percent) year-ago levels.

Storage --

Working natural gas in storage decreased to 3,804 Bcf as of Friday, November 30, according to EIA's WNGSR. This represents an implied net withdrawal of 73 Bcf from the previous week, the third and largest withdrawal for this heating season. This week's net withdrawal was 22 Bcf below the 5-year (2007-2011) average net withdrawal of 51 Bcf, and 59 Bcf below last year's injection of 14 Bcf. Inventories are currently 33 Bcf (0.9 percent) less than last year at this time and 168 Bcf (4.6 percent) greater than the 5-year average.

All three storage regions posted decreases this week. Inventories in the East, West, and Producing regions decreased by 56 Bcf (the 5-year average net withdrawal is 35 Bcf), 3 Bcf (the 5-year average net withdrawal is 7 Bcf), and 14 Bcf (the 5-year average net withdrawal is 9 Bcf), respectively. In the Producing region, working natural gas inventories increased 1 Bcf (0.3 percent) in salt cavern facilities and decreased 13 Bcf (1.3 percent) in nonsalt cavern facilities.



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