The NYMEX September 2012 futures contract rose by 4 percent from $3.052 per MMBtu last Wednesday to $3.171 per MMBtu yesterday. The settlement price increased significantly on Monday to $3.214 per MMBtu, the highest level since January. The 12-Month Strip (average of August 2012 to July 2013 contracts) also increased by 3.7 percent over the same period from $3.412 per MMBtu last Wednesday to $3.539 per MMBtu yesterday.
Total consumption for the report week registered an overall decrease, with slightly higher industrial sector demand being offset by decreases in other sectors. According to estimates from Bentek, domestic natural gas consumption declined by 2 percent from last week, driven by decreases in power, residential, and commercial demand. Industrial sector consumption increased slightly by 0.3 percent.
Total supply for the week was essentially unchanged, and registered a slight decrease of 0.3 percent, reflecting the drop in dry gas production. According to Bentek estimates, domestic weekly dry gas production was 0.1 percent lower than the previous week (although 3.2 percent above the same time last year). Imports from Canada decreased by 1.9 percent. Liquefied natural gas (LNG) sendout dropped sharply, down 10.7 percent from last week; sendout volumes remain well below (39 percent) year-ago levels.
Working natural gas in storage increased to 3,217 Bcf as of Friday, July 27, according to EIA’s WNGSR. This represents an implied net injection of 28 Bcf from the previous week. This week’s injection was 28 Bcf below the 5-year (2007-2011) injection of 56 Bcf, and 15 Bcf below last year’s injection of 43 Bcf. Since April 27, injections of working natural gas into underground storage have fallen short of both year-ago levels and the 5-year average, although stocks remain well above historical levels. Inventories are currently 472 Bcf (17.2 percent) greater than last year at this time and 407 Bcf (14.5 percent) greater than the 5-year average.
Two of the three storage regions posted increases this week. Inventories in the East and West regions increased by 30 Bcf over the week (with the 5-year average net injection of 49 Bcf) and 4 Bcf (with the 5-year average net injection of 5 Bcf), respectively, while the Producing region posted a decrease of 6 Bcf in working gas stocks (with the 5-year average net injection of 3 Bcf). In the Producing Region, working natural gas inventories decreased 8 Bcf (3.3 percent) in salt cavern facilities and increased 3 Bcf (0.3 percent) in nonsalt cavern facilities.
Temperatures during the storage report week were 2.6 degrees warmer than the 30-year normal temperature and 1.9 degrees cooler than the same period last year. Temperatures in the lower 48 States averaged 77.9 degrees, compared to 79.7 last year and the 30-year normal of 75.3. While overall temperatures were a few degrees warmer than normal, temperatures varied somewhat across Census Divisions. The West North Central and East North Central Census divisions in the Midwest were particularly warm, averaging 6.4 and 4.9 degrees, respectively, warmer than the 30-year normal. Temperatures in the New England Census division were cool, averaging 0.7 degrees cooler than the 30-year normal.