Henry Hub prices posted only slight increases over the week. Although projections of significantly cooler temperatures in the Midwest and other portions of the country likely caused prices to rise at all points but one on Monday, they retreated at most points on Tuesday and Wednesday, with the Henry Hub price closing the report week out at $3.58 per MMBtu, only a slight increase over last Wednesday’s $3.54 per MMBtu. Monday’s rally saw gains at the Chicago citygate, Transcontinental’s Zone 6 (Transco Z6) point for delivery into New York, and the Henry Hub of 29, 31, and 23 cents, respectively. Although prices at Transco Z6 and the Henry Hub subsequently declined, the Chicago citygate price remained high, closing yesterday 2 cents above Monday’s closing price, likely due to forecasts of cold weather.
Overall demand increases over the week were offset by declines in gas consumed for electricity generation. Power burn fell by 2.9 percent over the week according to estimates from BENTEK Energy Services, LLC. The drop was mostly a result of declines in Texas and the Southeast, where cooler temperatures likely caused the pullback in demand. Increases in the other sectors more than offset the power generation declines, and total consumption, as reported by BENTEK, increased by 5.5 percent over the report week.
Demand increases were met largely by higher imports, predominately from Canada. Imports from Canada increased by 4.1 percent and averaged 5.6 billion cubic feet per day, while LNG imports grew by 22.2 percent and averaged 641 million cubic feet (MMcf)/day. According to BENTEK Energy estimates, the week’s average dry gas production showed only a 0.1 percent increase from last week’s level. Domestic dry gas production stands 7.6 percent above this time last year. Canadian imports are at present less than 1 percent below this time last year, while LNG imports, in spite of their large percentage gain this week, are 6.2 percent below this week last year.
At the New York Mercantile Exchange, the price of the near-month contract (November 2011) increased about 10 cents, from $3.489 per MMBtu last Wednesday to $3.586 per MMBtu yesterday. The price of the 12-month strip increased slightly, from $3.948 per MMBtu last Wednesday to $3.956 per MMBtu yesterday. All of the contracts in this year’s winter strip (November 2011–March 2012) settled below $4 per MMBtu on Wednesday.
Working natural gas in storage rose to 3,624 Bcf as of Friday, October 14, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 103 Bcf from the previous week, stocks are now 46 Bcf below last year and 113 Bcf above the 5-year average. The injection was much larger than the 5-year average injection of 58 Bcf and last year’s injection of 93 Bcf.