Both demand and supply declined this week. According to BENTEK Energy Services LLC (Bentek) data, dry production declined by 0.4 percent from last week, but remains 0.7 percent above levels a year ago. Pipeline imports of natural gas from Canada declined across the board. While LNG sendout increased from the previous week, sendout still remains at minimal levels, averaging 281 MMcf per day. Domestic consumption fell 3.8 percent from last week, with decreases in the residential and commercial, power burn, and industrial sectors. Despite the overall decline in consumption of natural gas for power generation, the Midwest saw large increases beginning Sunday.
At the New York Mercantile Exchange, the April 2013 near-month contract rose slightly from $4.434 per MMBtu last week to $3.470per MMBtu yesterday. While still relatively low, prices are considerably greater than levels last April. The April 2012 contract at this time last year was trading around $2.300 per MMBtu. This week, the 12-month strip (the average of the contracts between April 2013 and March 2014) increased slightly from $3.725 per MMBtu to $3.761 per MMBtu.
Working natural gas in storage decreased to 2,083 Bcf as of Friday, March 1, according to EIA's WNGSR. This represents an implied net withdrawal of 146 Bcf from the previous week. This week's net withdrawal was 39 Bcf larger than the 5-year average net withdrawal of 107 Bcf, and 54 Bcf larger than last year's average net withdrawal of 92 Bcf. Inventories are currently 361 Bcf (14.8 percent) less than last year at this time and 269 Bcf (14.8 percent) greater than the 5-year average of 1,814 Bcf.
All three storage regions posted declines this week. Inventories in the East, West, and Producing regions decreased by 77 Bcf (the 5-year average net withdrawal is 79 Bcf), 11 Bcf (the 5-year average net withdrawal is 11 Bcf), and 58 Bcf (the 5-year average net withdrawal is 17 Bcf), respectively. In the Producing region, working natural gas inventories decreased 18 Bcf (8.7 percent) in salt cavern facilities and decreased 40 Bcf (6.0 percent) in nonsalt cavern facilities.
Temperatures during the storage report week were 1.4 degrees cooler than the 30-year normal temperature and 5.3 degrees cooler than the same period last year. Temperatures in the Lower 48 states averaged 38.1 degrees, compared to 43.4 degrees last year and the 30-year normal of 39.6 degrees. While overall temperatures were about a degree cooler than normal, temperatures varied somewhat by Census Division. In the West, the Mountain Census division was particularly cool, averaging 8.4 degrees cooler than the 30-year normal. In the Northeast, the New England Census division was relatively warm, averaging 3.7 degrees warmer than the 30-year normal. Heating degree-days nationwide were 5.5 percent above normal and 23.2 percent above last year.