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.
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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.
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.