Prices at the Nymex decreased this week. The December contract fell from $3.620/MMBtu last Wednesday to $3.498/MMBtu yesterday. This marked the third consecutive week that the near-month contract price declined alongside the Henry Hub spot price amid periods of warmer-than-normal weather.
Residential/commercial and power sector demand falls. Consumption decreased by 3.5% from the previous week, largely because of a 3.2% decrease in residential and commercial consumption, and a 7.1% decrease in power sector consumption, according to data from Bentek Energy. Space heating demand declined as temperatures were warmer than last week in the Northeast, Midwest, and Southeast. This was compounded by the fourth consecutive week of declining demand from the electric power sector, as the season for air conditioning nears an end. The decline in power burn was fairly uniform throughout the country, but was especially pronounced in the Southeast and Southwest.
Natural gas supply decreases slightly. Total supply decreased by 0.1% from the previous week. Although dry gas production increased for the week by 0.5%, net imports of natural gas from Canada fell by 8.9%. LNG imports rose 11.5%, although the volume is minuscule.
Working natural gas in storage rose to 3,814 Bcf as of November 1. The 35-Bcf gain in storage levels was larger than the 27-Bcf injection that occurred during the same week in 2012, but a little less than the 5-year average increase of 36 Bcf. Current inventories are 112 Bcf (2.9%) less than last year at this time, but 57 Bcf (1.5%) above the 5-year (2008-12) average of 3,757 Bcf.
The net injection was in line with the market expectation of a 35 Bcf build. Prices on the Nymex upon release of the storage numbers were relatively steady. At 10:30 a.m., the price of the near month (December 2013) contract rose less than a penny to about $3.59/MMBtu.
Two of the three regions posted smaller-than-average builds. Net injections in the East region were 10 Bcf this week, 7 Bcf smaller than its 5-year average injection of 17 Bcf, and stocks remain 4.7% below the 5-year average for that region. Inventories in the West region grew by 3 Bcf this week, 4 Bcf smaller than its 5-year average injection of 7 Bcf, and stocks in that region are 8.6% over its 5-year average levels. The Producing region grew by 22 Bcf, 9 Bcf larger than its 5-year injection of 13 Bcf.
Cooler temperatures led to relatively small build. Temperatures in the Lower 48 states averaged 51.4 degrees for the week, 0.9 degree cooler than the 30-year normal temperature and 2.7 degrees cooler than the same period last year.