Market Leader informed
Relatively warm weather in the US during the reporting week pushed down demand for gas used for domestic heating and by power stations. According to the National Weather Service, during the reporting week air temperature in the territory of the USA was below the norm for the third week at a go and lower than in the same period last year staying at an average of 30.3F, which is 2.1F lower than last year and 4.9 lower that the five-year average. However, the temperature rose last week, including by 12.6F or 16% in some southern and central regions.
As compared to the previous week, the average daily gas consumption went down by about 17.1% to 82.1 Bcf according to BENTEK Energy, LLC. Total natural gas consumption by residential and commercial sectors decreased by 23.3% to 40.2 Bcf a day. Such a decline in consumption immediately affected gas prices. The Henry Hub price went $0.29 or 6.9 percent down per MMBtu in a week while gas prices in the vicinity of the Gulf of Mexico fell on an average of 32-45 cents per MMBtu, by 8-10%. Gas prices in Western Texas in the El Paso pipeline fell by $0.55 per MMBtu thus confirming a price decline in many regions where temperatures were much higher than last week.
Gas production added 4.3 percent during the reporting week as compared to the week before. The overall level of prices remains a much lower than in the same period last year. $3.93 per MMBtu that Henry Hub cost was 30 percent less than $5.65 per MMBtu on 16 February 2010. The price fell most of all in the North East of the country where a slump in consumption caused the price to fall more that by $4.00 per MMBtu or more than by 45% in a week. In New York area where the Transcontinental Pipeline makes deliveries, the price was an average of $4.63 per MMBtu or $7.02 less than on Wednesday last week. Prices went down insignificantly in the west, near the Rockies, as compared to other regions – by 7%. Prices for deliveries from a gas pipeline going to California fell only by $0.19 to $3.80 per MMBtu.
Storage volumes of natural gas decreased to 1,911 Bcf according to WNGSR EIA. 233 Bcf was used up from underground storage. This is much more that the 5-year average value of 150 Bcf and more than last year’s value at 190 Bcf. Total reserves are now 141 Bcf lower than last year and 128 Bcf lower than the 5-year average.
American imports of natural gas were significantly lower during the reporting week. According to BENTEK which controls flows through the continental pipeline network, American imports from Canada went down 10.9% against last week to 7.5 Bcf a day. American imports from Canada were also 9.7% lower than during the same period last year.
The number of natural gas drilling rigs got smaller by 5 pieces during the week to 906 rigs, but this is 15 rigs more than last year.
The gas futures price with delivery in March at NYMEX went down by $0.12 to $3.921 per MMBtu.
As expected, last week natural gas prices continued moving down in line with the seasonal factor for this time of the year.
Analysts of the Commodity Derivatives Trading Department forecast a further decline in natural gas prices because, given the more than adequate production and delivery volumes and the seasonal factor, a temporary rise can happen only if air temperature in the US suddenly falls or there are unforeseen fundamental factors. However, a significant decline is unlikely because of low gas reserves even though the main tendency remains – falling.
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