Via FinViz:
Natural Gas Weekly Update
for week ending February 12, 2014 | Release Date: February 13, 2014 | Next Release: February 20, 2014
....Prices/Demand/Supply:
Natural gas prices remained high nationwide. The U.S. has faced bitterly cold weather over the past several weeks, and prices have remained elevated in response. This week, the Henry Hub spot price was greater than $7/MMBtu most days. A wave of cold at the beginning of the report week drove the day-ahead spot price to $7.90/MMBtu, a level not seen since September 2008. Natural gas prices had only been greater than $7/MMBtu a handful of times since September 2008, until this week. At the end of the week, the Henry Hub price had fallen to $6.15/MMBtu, which is still relatively high compared to sub-$4/MMBtu prices just a few months ago.
Northeast prices dropped. Most pricing points began the week above $10/MMBtu, but dropped throughout the week. A major winter storm hit much of the Mid-Atlantic on Wednesday night; however, prices continued to drop in the Northeast. At Transcontinental Pipeline's Zone 6 trading point for delivery into New York City (which was expected to receive about a foot of snow on Thursday), prices declined almost $13/MMBtu from Tuesday to Wednesday ($20.74/MMBtu to $7.80/MMBtu.) Similarly, at Texas Eastern Transmission's M-3 trading point, which serves Mid-Atlantic customers in New Jersey and Pennsylvania, prices fell more than $10/MMBtu from Tuesday to Wednesday ($17.50/MMBtu to $6.96/MMBtu). Declines were similar in Boston and other major market areas in the Northeast.
Price declines seemed counterintuitive. Some analysts quoted in the trade press attributed the price declines to a lack of demand caused by the storm. While residential demand will increase, overall demand could fall because of closed schools, businesses, and office buildings. In its daily Northeast Observer report, Bentek Energy projected a 22% decline in demand in the Northeast from 34.3 Bcf Wednesday to 26.9 Bcf on Thursday.
Before it hit the Northeast, the storm covered much of the South with snow and ice. Storms hit Georgia and the Carolinas on Wednesday. In an update, the National Weather Service noted that ice accumulations would be "mind-boggling if not historical." Natural gas spot prices in the Southeast were mostly between $7 and $8/MMBtu on Tuesday. Earlier in the report week, cold weather in Texas boosted consumption of natural gas for power generation (power burn); power burn rose 45% from the previous week and was 73% greater than the same week last year. Texas is one of the major consuming regions of natural gas for power generation, after the Northeast and Southeast.
Imports rose to meet demand. This week, U.S. natural gas imports from Canada rose 5.0% from the previous week, according to data from Bentek. Imports are 22.8% greater than the same week last year. While U.S. natural gas imports in general have declined over the past several years, they still are an important source of supply in times of high demand. This has been particularly true this winter. LNG sendout, while small, has also risen this winter, with supplies this week coming from the Elba Island terminal in Georgia and the Everett terminal in Massachusetts.
Natural gas production declined. This week, dry production fell 0.5% from the previous week (though it is 0.7% greater than the same week last year). While dry production remains at historically high levels, and is still greater than last year, the winter weather has hindered production. In its earnings call last week, Chesapeake Energy, a major producer of natural gas in the United States and very active in the Marcellus Shale, noted that oil and gas output were well below expectations as a result of the cold weather.
U.S. consumption rose 15.7% this week. Increases in U.S. demand this week were evident by a 19.6% increase in power burn and a 17.6% increase in residential and commercial consumption as cold weather led to increases in heating demand. Industrial consumption, which is also sensitive to weather but to a lesser degree than residential and commercial, rose by 4.3%, according to Bentek data. In Bentek's eight-year history, the six highest days of total consumption all fell in January and February this year; February 6 was the fifth-highest value....MORE
