At the moment the US market is accumulating natural gas in advance of the summer season of “conditioning” (The consumption of electricity grows during summer as conditioners consume a lot of energy).
Consumption forecast. The EIA expects that in 2011 the net volume of gas consumption will stay close to the level of 2010. The consumption forecast for household and commercial sectors should be lower than for 2010 by 1.2% and 2.7% correspondingly. However the industrial consumption is expected to grow from 18,1Bcf per day in 2010 up to 18,8B in 2011.
The net consumption volume is expected to gain in value 0.9% in 2012 (From 66,6B up to 67,2Bcf). The growing consumption of gas in the energy and manufacturing sectors is partially compensated by a slight decline in the housing and commercial consumption, The EIA anticipates a consumption increase in the energy and industrial sectors in 2012 by 2,8 and 1,5% correspondingly.
Production forecast. The production of natural gas was significantly increased in 2010 (by 4.4%).
The consumption growth in 2012 will be conditioned by the growing consumption of the energy sector, which in its turn will stimulate production growth. According to the forecast, the production volume will grow by 0.9% in 2012.
Import. The EIA expects that the net import of natural gas will decline by 8.4Bcf a day in 2011 and by 8.2Bcf a day in 2012 (by 5,6 and 2,3% correspondingly).
The main reasons for the expected import decline are the following: high domestic production volume and sufficient stocks.
Stocks. The US gas stocks declined by 45Bcf, making up 1,579Bcf, which is 0.6% higher than the 5-year average value for this time of the year (1,569cf).
The reason for the decline is cold weather in the West of the USA and consequently higher consumption.
At the moment there is seasonal growth of gas prices going on in the US. The possibility of strengthening of the US economy also implies higher demand for energy carriers, including natural gas. The price of natural gas will most likely continue its rally. If the price breaks and consolidates above 4.2, the next target will be 4.4.
The Department of Commodity Trading, Masterforex-V Academy
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