Natural Gas Weekly Update for Week Ending November 7, 2012
In the News:
Natural Gas Inventories Finish 2012 Storage Injection Season at Record Levels
Lower 48 working natural gas inventories as of October 31, 2012 were at an end-of-season record of 3,923 billion cubic feet (Bcf), based off an interpolation of the levels reported in the last two Weekly Natural Gas Storage Reports (which estimated stock levels for October 26 and November 2). This reflects a 3.0 percent year-over-year increase over inventories in 2011, and is 6.8 percent above the five-year average storage levels on October 31 for 2007-2011.
The 264 heating degree-days recorded for October 2012 was the highest level since October 2009. However, continued strong natural gas production ensured that inventory levels continued to grow. Both the Producing and West Regions’ inventories reached record end-of-season levels of 1,283 Bcf and 546 Bcf, respectively. Inventories in the East region reached 2,095 Bcf, which is 2.0 percent higher than that region’s five-year average.
Although the natural gas storage injection season is traditionally defined as April through October, injections into storage have continued into November for the past several years.
(For the Week Ending Wednesday, November 7, 2012)
- Natural gas prices increased for the report week (Wednesday to Wednesday) at many of the country’s trading locations, particularly the Algonquin Citygate (which serves consumers in Boston), where prices doubled from last week to $8.45 per million British thermal units (MMBtu). The Henry Hub price closed at $3.47 per MMBtu, down 3 cents per MMBtu for the week.
- The natural gas futures market trended steadily lower over the week. At the New York Mercantile Exchange (NYMEX), the December 2012 natural gas contract lost 11 cents per MMBtu to close at $3.578 per MMBtu yesterday.
- Working natural gas in storage rose last week to 3,929 Bcf as of Friday, November 2, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). An implied storage build of 21 Bcf for the week positioned storage volumes 109 Bcf above year-ago levels.
- The natural gas rotary rig count, as reported by Baker Hughes Incorporated on November 2, increased by 8 to 424 active units. The oil-directed rig count fell by 35 to 1,373 active units.
Natural gas prices increased over the report week at most spot market locations. For example, at the Sumas (Northwest Washington), SoCal (Southern California), Transco Zone 6 New York (New York City), and Algonquin Citygate (Boston) trading points, spot prices increased between $0.23 and $4.27 per MMBtu for the week, with the largest increases occurring in the Northeast. The price increases were driven by a combination of colder-than-normal temperatures, pipeline constraints, and relatively low Northeast LNG imports.
The NYMEX December 2012 futures contract decreased by 3.1 percent from $3.691 per MMBtu last Wednesday to $3.578 per MMBtu yesterday. The 12-Month Strip (average of December 2012 to November 2013 contracts) decreased by 2.4 percent over the same period, from $3.851 per MMBtu last Wednesday to $3.760 per MMBtu yesterday.
Total consumption for the report week registered an increase, driven by a significant increase in residential/commercial consumption. According to estimates from BENTEK Energy LLC (Bentek), average domestic natural gas consumption rose by 7.5 percent from last week’s daily average. The rise resulted principally from a 22.8 percent week-on-week increase in average residential/commercial consumption. Bentek also estimated a slight increase for industrial consumption. Together, these increases far exceeded the 3.7 percent drop in power sector consumption from last week’s daily average.
Total supply for the report week decreased, driven by declines in domestic production and imports from Canada. Bentek estimates that average daily natural gas supply for this report week decreased by 0.7 Bcf per day (0.9 percent) over the previous week’s daily average. This resulted from a 0.5 percent decrease in dry production and a 7.8 percent decrease in imports from Canada.
Working natural gas in storage increased to 3,929 Bcf as of Friday, November 2, according to EIA’s WNGSR, the highest recorded volume since EIA began keeping records. This represents an implied net injection of 21 Bcf from the previous week. This week’s injection was 15 Bcf below the 5-year (2007-2011) average injection of 36 Bcf, and 27 Bcf below last year’s injection of 48 Bcf. Inventories are currently 109 Bcf (2.9 percent) greater than last year at this time and 244 Bcf (6.6 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 5 Bcf (the 5-year average net injection is 16 Bcf), 8 Bcf (the 5-year average net injection is 6 Bcf), and 8 Bcf (the 5-year average net injection is 14 Bcf), respectively. In the Producing region, working natural gas inventories increased 7 Bcf (2.3 percent) in salt cavern facilities and decreased 1 Bcf (0.1 percent) in nonsalt cavern facilities.
The average temperature during the storage report week was 1.0 degree cooler than the 30-year normal temperature and 1.3 degrees warmer than the same period last year. Temperatures in the lower 48 States averaged 51.0 degrees, compared to 49.7 degrees last year and the 30-year normal of 52.0 degrees. While overall temperatures were a degree cooler than normal, temperatures varied somewhat across Census divisions. In the Northeast, the New England Census division was particularly warm, averaging 7.6 degrees warmer than the 30-year normal. In the South, the West South Central Census division was particularly cool, averaging 5.6 degrees cooler than the 30-year normal. Heating degree-days nationwide were 4.1 percent above normal and 9.0 percent below last year.