Friday, December 11, 2015

EIA Weekly Natural Gas Supply/Demand Report: Futures Trade Under $2.00

January's at $1.970 down 0.045 after trading as low as $1.966 and looking very weak. More to come.
From the Energy Information Administration:

(For the Week Ending Wednesday, December 9, 2015)
  • Natural gas prices are down at virtually all trading locations for the report week (Wednesday, December 2, through Wednesday, December 9). The Henry Hub spot price began the week at $2.17 per million British thermal units (MMBtu) last Wednesday and ended at $2.00/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the January Nymex price began at $2.165/MMBtu last Wednesday and settled at $2.062/MMBtu yesterday.
  • Working natural gas in storage decreased by 76 billion cubic feet (Bcf), declining to 3,880 Bcf as of Friday, December 4. The net withdrawal from storage resulted in storage levels 15% above a year ago and 6% above the five-year (2010–14) average for this week.
  • The total oil and natural gas rig count fell by 7 units this week, with 737 units in service for the week ending Friday, December 4, according to data from Baker Hughes Incorporated. This is the lowest combined oil and natural rig count since October of 1999. The oil rig count fell by 10 units to 545, and the natural gas rig count increased by 3 units to 192 units.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, increased by 1.3% to $4.86/MMBtu for the week ending Friday, December 4. The prices for ethane and natural gasoline declined by 2.0% and 0.6%, respectively; the prices for propane, butane, and isobutane increased by 2.2%, 3.9%, and 4.5%, respectively.

Henry Hub price dips below symbolic $2.00/MMBtu.
Following a record-warm October, continuing growth in natural gas production, record underground natural gas storage levels, and the projected continuation of mild winter weather, the Henry Hub price closed at $1.98/MMBtu on Tuesday and $2.00/MMBtu yesterday. Prior to this week, the Henry Hub spot price has only closed below $2.00/MMBtu on 20 trading days since 2002. During the summer of 2012, when natural gas storage stocks were very high following an unusually mild winter, prices dipped into the $1.80-$1.90/MMBtu range for a few days. That summer, the ample supply of low-priced natural gas was absorbed in large part by the electric power sector.

Natural gas prices are typically elevated during the winter, when residential heating demand competes with other sectors for supply and draws down storage stocks. This winter, however, as expected, prices have remained low, and market participants anticipate that low natural gas prices will continue; the average futures price contract for the remaining winter months (January, February, and March), which can serve as an indicator of market expectations, was only 11¢ above the Henry Hub price yesterday.

Spot prices down across the board on mild weather. During this report period, weather was much milder overall compared to the previous period, particularly Tuesday and yesterday....

Unfortuneately for the bulls they don't use a lot of gas in the Rockies:
Mean Temperature Anomaly (F) 7-Day Mean ending Dec 03, 2015