The NYMEX near-month (December 2011) contract lost 9.7 cents this week, falling from $3.749 per MMBtu last Wednesday to $3.652 per MMBtu yesterday. During its tenure as the near-month contract, which began on October 28, the December 2011 contract has lost 27.1 cents, or about 7 percent of its value. The 12-month strip (the average of the 12 contracts between December 2011 and November 2012) also fell this week, dropping from $3.945 per MMBtu last Wednesday to $3.825 per MMBtu yesterday.
This week, NYMEX prices entering the winter for the November 2011-March 2012 five-month strip reached their lowest levels seen since 2001-2002. Price expectations going into winter reached their highest point, at close to $12 per MMBtu, heading into the winter of 2005-2006, after Hurricanes Katrina and Rita caused natural gas supply disruptions in the Gulf of Mexico. In the past several years, however, as onshore lower 48 production has grown substantially, particularly in shale formations, winter price expectations have moderated.
Working natural gas in storage rose to 3,831 Bcf as of Friday, November 4, according to EIA’s WNGSR (see Storage Figure). This represents an implied net injection of 37 Bcf. Though October 31 each year is the official end of the injection season, storage builds often continue into November. In fact, the 5-year (2006 – 2010) averages for both November 4 and November 11 are positive, a net injection of 23 Bcf and 10 Bcf, respectively. Last year during the same week, working natural gas inventories rose 26 Bcf. Current inventories are 6 Bcf lower than their year-ago levels, and 215 Bcf above the 5-year average. Storage inventories are currently 16 Bcf below the all-time monthly high of 3,847 Bcf, which was recorded for the month of October 2010.
The Producing Region is the only region where stocks are above last year’s levels. Working inventories in this region total 1,235 Bcf, 4 Bcf more than year-ago levels. Inventories in the East and West Regions, however, are close to their year-ago levels, falling only 2 Bcf and 8 Bcf short, respectively. Stocks are above the 5-year average in all three of the storage regions.
Temperatures during the week ending November 3 were about 2.1 degrees cooler than the 30-year normal temperature level (see Temperature Maps and Data). Most Census Divisions were cooler than normal, with exceptions in the West North Central and the Pacific Census Divisions. Compared with the same week last year, overall temperatures in the United States were 2.3 degrees cooler.