Natural Gas Update – January 26, 2012

Natural Gas Storage Facts

EIA (Energy Information Administration) reported a net withdrawal of 192 Bcf (billion cubic feet) for the week ending January 13, 2011.

Inventories are at 3,098 Bcf, which is up 20.7% or 531 Bcf from last year and 547 above the 5-year average or 21.4%.

www.eia.doe.gov

Spot prices at most market locations fell early during the report week (Wednesday, January 18 to Wednesday, January 25), only to reverse the trend on Monday and end the report week up. The Henry Hub spot price increased 12 cents over the week, from $2.49 per MMBtu last Wednesday to $2.61 per MMBtu yesterday. The New York Mercantile Exchange followed a similar pattern, with the near-month contract (February) increasing 25.7 cents, from $2.472 per MMBtu last Wednesday to $2.729 yesterday. Working natural gas in storage fell last week to 3,098 billion cubic feet (Bcf) as of Friday, January 20, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 192 Bcf, positioning storage volumes 531 Bcf above year-ago levels.The natural gas rotary rig count, as reported by Baker Hughes Incorporated on January 20, fell by 11 to 780. The count for oil-directed rigs increased by 32 to 1,223. While the gas rig count is 14 percent lower than this week last year, the oil rig count is up by 53 percent.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.014 MMBtu                        $3.353 MMBtu

Natural Gas Update – January 19, 2012

EIA (Energy Information Administration) reported a net withdrawal of 87 Bcf (billion cubic feet) for the week ending January 13, 2012.

Inventories are at 3,290 Bcf, which is up 19.6% or 539 Bcf from last year and 566 above the 5-year average or 20.8%.

www.eia.doe.gov

With few exceptions, natural gas prices dropped substantially at most market locations. The Henry Hub price continued declines from last week, falling 32 cents over the week to end yesterday at $2.49 per MMBtu. Most other pricing points that posted declines fell by similar amounts, in the 20 to 30 cents range. A relatively warm winter so far, as well as higher-than-average storage levels, has put downward pressure on natural gas prices this year.

At the NYMEX, prices dropped to lows not seen in almost 10 years. The near-month (February 2012) futures contract fell from $2.774 per MMBtu last Wednesday to $2.472 yesterday. The 12-month strip, the average of the 12 contracts between February 2012 and January 2013, declined from $3.114 per MMBtu last Wednesday to $2.848 per MMBtu yesterday.

Working natural gas in storage fell to 3,290 Bcf as of Friday, January 13, according to EIA’s WNGSR. This represents an implied net withdrawal of 87 Bcf. Stocks were 566 Bcf higher than the 5-year average level, as well as 539 Bcf higher than last year at this time. Inventories in the Producing Region stand out at 276 Bcf (31.1 percent) above the 5-year average of 888 Bcf. Stocks in the East and West Regions were above their 5-year averages by 224 Bcf (15.2 percent) and 66 Bcf (18.0 percent), respectively.

The implied net withdrawal was 46% lower than the 5-year average withdrawal for the week, likely due to warmer-than-normal weather. In all three regions, the net withdrawals for the week were significantly lower than the 5-year average. The implied net withdrawal of 15 Bcf in the Producing region was 70% lower than the 5-year average. Implied net withdrawals in the East and West Regions were 33% and 48% lower than the 5-year average, respectively.

Temperatures during the week ending January 12 were 9.1 degrees warmer than the 30-year normal temperature and 13.1 degrees warmer than the same period last year. At the national level, the average temperature was higher than the 30-year average by a greater margin than the last 9 weeks of warmer-than-normal temperatures. During the week all regions were warmer than normal, particularly the West North Central and East North Central regions in the Midwest averaging 13.7 and 13.6 degrees warmer than normal, respectively. Heating degree-days nationwide were down 28.8 percent from normal.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$2.73 MMBtu                          $3.09 MMBtu

Natural Gas Update – January 12, 2012

EIA (Energy Information Administration) reported a net withdrawal of 95 Bcf (billion cubic feet) for the week ending January 6, 2012.

Inventories are at 3,377 Bcf, which is up 13.4% or 398 Bcf from last year and 491 above the 5-year average or 17%.

www.eia.doe.gov

Higher-than-average seasonal temperatures, coupled with continued high storage levels and consistent production, put downward pressure on natural gas prices again this week. The Henry Hub price closed at $2.81 per MMBtu on January 11, down 15 cents for the week.

At the New York Mercantile Exchange (NYMEX), the February 2012 natural gas contract slid 32.2 cents per MMBtu for the week to close at $2.774 per MMBtu, a life-of-contract low.

Working natural gas in storage eased slightly last week to 3,377 Bcf as of Friday, January 6, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 95 Bcf, positioning storage volumes 398 Bcf above year-ago levels.

The natural gas rotary rig count, as reported January 6 by Baker Hughes Incorporated, increased by 2 to 811 active units. Meanwhile, oil-directed rigs decreased by 2 to 1,191 units.

In the News:

EIA releases the Short-Term Energy Outlook – On January 10, 2012, the U.S. Energy Information Administration (EIA) released its monthly Short-Term Energy Outlook (STEO), the first STEO to include forecasts for 2013. Highlights of January’s STEO for natural gas include record volumetric increases in marketed production and inventories in 2011, as well as a significantly lower forecast for prices in 2012.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.08 MMBtu                          $3.44 MMBtu

Natural Gas Update – January 5, 2012

Natural Gas Storage Facts

EIA (Energy Information Administration) reported a net withdrawal of 76 Bcf (billion cubic feet) for the week ending December 29, 2011.

Inventories are at 3,472 Bcf, which is up 11.4% or 356 Bcf from last year and 458 above the 5-year average or 15.2%.

www.eia.doe.gov

Despite some significant weather-related price spikes in the Northeast over the New Year’s weekend, natural gas prices fell over the report week at most market locations. The Henry Hub price dropped below $3 per MMBtu on Friday and remained there through the balance of the report week to end the week at $2.96 per MMBtu, eleven cents below its value last Wednesday. Frigid weather in the East, contrasted with milder temperatures in other parts of the country, led to a mixed market over the week with little major movement in prices at most locations. The Chicago citygate price declined steadily over the week from $3.16 per MMBtu last Wednesday to $3.05 per MMBtu yesterday.

Total consumption over the report week was up by 2.5 percent according to Bentek, with the highest increases in residential/commercial consumption, up 3.2 percent. Although residential/commercial consumption dropped through Saturday, it picked up significantly on Sunday, and double digit percentage increases were registered on Monday and Tuesday. By Wednesday, demand had begun to drop off, consistent with the weather pattern in the East over the week.

At the NYMEX, the February 2012 contract posted a small decline over the report week, falling from $3.121 per MMBtu last Wednesday to $3.096 per MMBtu yesterday. The contract price fell below $3 per MMBtu over the Holiday weekend, but moved back above the $3 per MMBtu benchmark yesterday. The 12-month strip (the average of the 12 contracts between February 2012 and January 2013) followed a slightly different pattern, declining only slightly during the week and rising overall for the week from $3.348 per MMBtu last Wednesday to $3.400 per MMBtu yesterday.

Working natural gas in storage fell to 3,472 Bcf as of Friday, December 30, according to EIA’s WNGSR. This represents an implied net withdrawal of 76 Bcf, much smaller than the 5-year average draw of 106 Bcf, as well as last year’s draw of 135 Bcf. Stocks are well above average in all three regions. Relatively warm weather through the week contributed to the reduced withdrawal.

Inventories at the end of the year were at their highest levels for that week since EIA began tracking storage levels. Large production increases throughout the year and generally mild weather through the first months of the heating season have contributed to the record level. The Producing Region stands out at 499 Bcf (71.7 percent) above the 5-year average.

Temperatures during the week ending December 29 were 4.9 degrees warmer than the 30-year normal temperature and 6.0 degrees warmer than last year. All regions with the exception of the West South Central were warmer than normal. The Midwest was particularly warm, with the East North Central and West North Central regions averaging 7.4 and 10.7 degrees warmer than normal, respectively. Heating degree-days nationwide were down 15.3 percent from normal.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.29 MMBtu                          $3.63 MMBtu

Natural Gas Update – December 29, 2011

Natural Gas Storage Facts

EIA (Energy Information Administration) reported a net withdrawal of 81 Bcf (billion cubic feet) for the week ending December 23, 2011.

Inventories are at 3,548 Bcf, which is up 9.1% or 297 Bcf from last year and 428 above the 5-year average or 13.7%.

www.eia.doe.gov

Due to the holiday season, the EIA will release its next natural gas update next week, on January 5, 2011.

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.33 MMBtu                         $3.66 MMBtu

Natural Gas Update – December 22, 2011

Natural Gas Storage Facts

EIA (Energy Information Administration) reported a net withdrawal of 100 Bcf (billion cubic feet) for the week ending December 16, 2011.

Inventories are at 3,629 Bcf, which is up 6.9% or 235 Bcf from last year and 387 Bcf above the 5-year average or 11.9%.

www.eia.doe.gov

Even though today marks the first full day of winter, natural gas prices fell on the report week at most market locations. The Henry Hub price flirted with the sub-$3 per MMBtu mark, but ultimately ranged within $3.01 per MMBtu and $3.08 per MMBtu, ending the week three cents below its value last Wednesday. Although Northeastern prices increased with cold weather, they eventually fell by the end of the report week. Forecasts for colder temperatures across most of the country heading into the weekend, however, could lead to some gains in prices.

At the NYMEX, the January 2012 contract posted a small gain over the report week, rising from $3.136 per MMBtu last Wednesday to $3.155 per MMBtu yesterday. The contract recovered losses from earlier in the week; on Monday, the contract ended the day at $3.096 per MMBtu. The 12-month strip (the average of the 12 contracts between January and December 2012) followed a similar pattern, rising from $3.405 per MMBtu last Wednesday to $3.430 per MMBtu yesterday.

Temperatures during the week ending December 15 were 1.9 degrees warmer than the 30-year normal temperature and 5.7 degrees warmer than last year. All regions except the Mountain and Pacific experienced relatively warm temperatures during the week.  Those two regions, largely comprising the West storage region, were respectively 1.0 and 3.1 degrees colder than the 5-year average. Nationwide, heating degree-days were down 6.2 percent from average and 17.3 percent from last year.

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.44 MMBtu                          $3.76 MMBtu

Natural Gas Update – December 15, 2011

Natural Gas Storage Facts

EIA (Energy Information Administration) reported a net withdrawal of 102 Bcf (billion cubic feet) for the week ending December 9, 2011.

Inventories are at 3,729 Bcf, which is up 4.3% or 154 Bcf from last year and 347 above the 5-year average or 10.3%.

www.eia.gov

An absence of significantly lower seasonal temperatures, coupled with continued high storage levels, put downward pressure on natural gas prices this week. The Henry Hub price closed down 37 cents for the week to $3.08 per MMBtu on December 14. At the New York Mercantile Exchange (NYMEX), the January 2012 natural gas contract slid 28.5 cents per MMBtu for the week to close at $3.136 per MMBtu, a two-year low.Working natural gas in storage eased only slightly last week to 3,729 billion cubic feet (Bcf) as of Friday, December 9, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 102 Bcf, positioning storage volumes 154 Bcf above year-ago levels.The natural gas rotary rig count, as reported December 9 by Baker Hughes Incorporated, fell by 36 to 820 active units. Meanwhile, oil-directed rigs increased by 29 to 1,161 units.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.39 MMBtu                          $3.70 MMBtu

Natural Gas Update – December 8, 2011

EIA (Energy Information Administration) reported a net withdrawal of 20 Bcf (billion cubic feet) for the week ending December 2, 2011.

Inventories are at 3,831 Bcf, which is up 2.7% or 102 Bcf from last year and 307 Bcf above the 5-year average or 8.7%.

www.eia.doe.gov

Despite forecasts for substantially colder temperatures near the end of the report week across most parts of the country, natural gas price changes at the end of the report week were still somewhat mixed. The Henry Hub price rose only 2 cents on the last day of the report week, from $3.43 per MMBtu on Tuesday to $3.45 per MMBtu yesterday.

Consumption of natural gas rose this week, in conjunction with reduced supply. Domestic consumption rose 18.4 percent, according to data released by Bentek, with larger gains near the end of the report week. The largest gains came from the residential and commercial sectors, as well as the electric power sector. Production fell on the week, as a result of early seasonal freeze-offs as well as maintenance issues affecting some Western pipeline infrastructure systems. Both LNG sendout and imports from Canada rose on the week to accommodate increased demand for heating.

At the New York Mercantile Exchange, the January 2012 futures contract fell from $3.550 per MMBtu last Wednesday to $3.421 per MMBtu yesterday. Futures prices are below their year-ago levels; as of December 7 last year, the January 2011 futures contract had ranged from $4.180 per MMBtu to $4.488 per MMBtu during its tenure as the near-month contract. This week, the 12-month strip (the average of the 12 contracts between January 2012 and December 2012) fell to $3.651 per MMBtu yesterday, from $3.754 per MMBtu last Wednesday.

Working natural gas in storage fell to 3,831 Bcf as of Friday, December 2, according to EIA’s WNGSR. This represents an implied net withdrawal of 20 Bcf. The withdrawal was much smaller than both the 5-year average withdrawal of 66 Bcf and last year’s 79 Bcf draw. Stocks are now 307 Bcf above the 5-year average and 102 Bcf above last year.

Temperatures during the week ending December 1 were 5.1 degrees warmer than the 30-year normal temperature level and 6.6 degrees warmer than last year. In fact, temperatures were slightly warmer than the previous week. Every region of the country except the West South Central was warmer than normal. The Northeast was warmest relative to normal with New England 10.7 degrees above average and the Middle Atlantic 10.0 degrees above. Heating degree-days were down 22.2 percent from normal and 26.6 percent from last year.

www.eia.gov

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.66 MMBtu                           $3.96 MMBtu

Natural Gas Update – December 1, 2011

EIA (Energy Information Administration) reported a net withdrawal of 17 Bcf (billion cubic feet) for the week ending November 25, 2011.

Inventories are at 2,074 Bcf, which is up 0.9% or 19 Bcf from last year and 73 Bcf above the 5-year average or 3.6%.

www.eia.doe.gov

Likely due to forecasts for moderate temperatures and expected reduced demand going into a holiday weekend, prices at most pricing locations across the country were below $3 per MMBtu the day prior to Thanksgiving. On Monday, November 21, the Henry Hub price closed at $2.94 per MMBtu, falling below $3.00 per MMBtu for the first time since November 16, 2009. By Wednesday, the day before Thanksgiving and the start of this report week, it had declined another 10 cents to close at $2.84 per MMBtu. Going into the holiday weekend most pricing points across the country were under $3.00 per MMBtu, and most prices along the Gulf Coast were under $2.80 per MMBtu. Mild holiday weekend temperatures were replaced with considerably cooler temperatures by the beginning of the week, and on Monday essentially all pricing points were back above $3.00 per MMBtu. Across the board increases continued as temperatures continued to drop, and most points closed yesterday above $3.50 per MMBtu. Prices over the report week at the Henry Hub increased from $2.84 to $3.53 per MMBtu. At the Transco Zone 6 pricing point for delivery into New York City, the price climbed from $2.99 to $4.11 per MMBtu. The Algonquin Citygate price (servicing Boston) posted a 20 percent increase, beginning the week at $3.72 per MMBtu and closing yesterday at $4.46 per MMBtu.

At the NYMEX, the January 2012 contract moved into the near-month position and oscillated over the report week from a high of $3.655 per MMBtu to a low of $3.525 per MMBtu, closing yesterday at $3.550 per MMBtu, down 5.8 cents (1.6 percent) from $3.608 per MMBtu last Wednesday. The December 2011 contract expired on Monday (November 28) at $3.364 per MMBtu. The 12-month strip remained relatively even over the week, beginning the week at $3.728 per MMBtu and closing the week yesterday at $3.754 per MMBtu.

Although consumption over the Thanksgiving weekend remained relatively low, overall consumption showed considerable daily increases from Sunday through the remainder of the report week. Bentek reported the lowest consumption level for the week of 58 Bcf on Saturday, which was followed by average daily increases of over 15 percent beginning Sunday and continuing through the end of the report week (yesterday). Bentek reported yesterday’s consumption at 73 Bcf, an increase of more than 25 percent over Saturday’s low. The increases were primarily a result of high residential/commercial demand in the South due to unseasonable cold temperatures. In spite of the end-of-week increases, average overall domestic consumption for the week posted a 6 percent decrease over the previous report week. The declines were mostly in residential/commercial consumption, which saw a 7.2 percent drop, and in gas used for power generation, which posted a 10.3 percent decline.

Working natural gas in storage fell to 3,851 Bcf as of Friday, November 25, according to EIA’s WNGSR. This represents an implied net withdrawal of 1 Bcf, the first withdrawal of the 2011-2012 winter heating season. The withdrawal was considerably smaller than both the 5-year average withdrawal of 29 Bcf and last year’s 21 Bcf draw. Stocks are now 261 Bcf and 41 Bcf above the 5-year average and last year, respectively.

The regional breakdown shows that the East Region was actually the only region with a net withdrawal during the week. This net withdrawal occurred despite relatively warm weather in the East Region during the week. The West and Producing Regions built by 2 Bcf and 14 Bcf, mostly offsetting the draw in the East Region. All three regions remain well above average levels, but the Producing Region stands out at 159 Bcf (14 percent) above average.

Temperatures during the week ending November 24 were 2.6 degrees warmer than the 30-year normal temperature level. Although the temperature fell 3.4 degrees from the previous week, every region of the country except the Pacific Region experienced warmer than normal weather. Nationwide, heating degree-days were down about 11 percent from normal and 4 percent from last year.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.85 MMBtu                          $4.14 MMBtu

Natural Gas Update – November 17, 2011

Natural Gas Storage Facts

EIA (Energy Information Administration) reported a net injection of 19 Bcf (billion cubic feet) for the week ending November 11, 2011.

Inventories are at 3,850 Bcf, which is up 0.4% or 14 Bcf from last year and 224 Bcf above the 5-year average or 6.2%.

www.eia.doe.gov

Movement in the Henry Hub day-ahead price reflected the decline of other trading locations in this week’s cash market by falling 12.4 percent from $3.55 per MMBtu the previous Wednesday to $3.11 per MMBtu yesterday.

At the NYMEX, the December 2011 contract fell 30.8 cents (8.4 percent) over five consecutive days from $3.652 per MMBtu last Wednesday to $3.344 per MMBtu yesterday. Over the same period, the January 2012 and February 2012 natural gas futures contracts dropped 26.6 cents and 26.5 cents per MMBtu, respectively, illustrating the potential impacts high storage levels coupled with continued robust production could have on gas prices this coming winter.

In the midst of generally mild fall temperatures and the absence of any significantly colder weather load, consumption posted a modest decrease for the week. According to estimates from BENTEK Energy Services, LLC (BENTEK), domestic gas consumption decreased by 2.4 percent over last week.

Working natural gas in storage rose to 3,850 Bcf as of Friday, November 11, according to EIA’s WNGSR (see Storage Figure). This represents an implied net injection of 19 Bcf, higher than the 5-year average injection of 10 Bcf and last year’s draw of 1 Bcf. Weekly stocks reached an all time high, surpassing the previous weekly record of 3,840 Bcf from November 5, 2010.

While stocks are only slightly above last year’s levels, high production could mean another record setting week of injections. Weather will be a major factor as always.

Other Market Trends:

Rig Count Drops to 877. The natural gas rotary rig count declined by 30 to 877 for the week ending November 11, 2011, according to data released by Baker Hughes Incorporated. This is the second consecutive decline, and this week’s decline follows another relatively large decline of 27 rigs posted last week. The natural gas rig count has fallen back to its lowest level since July 29, 2011.

www.bloomberg.com  

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.68 MMBtu                          $3.99 MMBtu