Friday, September 9, 2016

Natural Gas: EIA Weekly Supply/Demand Report

October futures  2.824 up 0.018.
From the Energy Information Administration:

In the News:
High natural gas summer storage inventories contribute to low prices and increased power burn
With a late-summer heat wave across much of the eastern half of the country, natural gas consumed for power (power burn) reached 36.2 billion cubic feet (Bcf) on Wednesday, according to PointLogic data. The current high levels of power burn follow record gas consumption for power over the summer. From June through August, power burn averaged 35.2 Bcf per day, 9% higher than the same months last year, and 23% higher than the five-year (2011-15) average. The total number of cooling degree-days (CDD) from June through August were 12% above the same period last year, and 24% above normal for the period.

While higher demand for electricity is a primary contributor to increased use of natural gas for generation, relatively low natural gas prices this summer were also a contributing factor to the high power burn. The natural gas price at the U.S. benchmark Henry Hub in Louisiana averaged $2.74 per million British thermal units (MMBtu) from June through August. This is 2% lower than last year at the same time, and 22% lower than the five-year average for that time period. Low prices, driven in part by high natural gas storage levels, allowed natural gas to better compete with coal as a fuel for base-load generation.

U.S natural gas inventories stood at an all-time high of 2,480 Bcf at the beginning of the injection season on April 1, just exceeding the previous high of 2,478 Bcf set in April 2012. Similar to 2012, the relatively high storage levels this year reduced the volume of natural gas that is needed to be injected into storage to reach average working gas levels at the start of the heating season and put downward pressure on the price. Since April 1, injections of natural gas into storage have totaled 957 Bcf. Despite being 46% lower than injections last year, and 37% lower than the five-year average, storage inventories remain higher than both last year and the five-year average levels....MORE
Summer power burn and Henry Hub spot price
... Supply remains relatively flat. According to data from PointLogic, total supply of natural gas fell by 1% over the report week, driven by a 14% decrease in average net imports from Canada. Dry production remained constant week over week.

Consumption drops substantially. During the report week, total U.S. consumption of natural gas fell by 8%, according to data from PointLogic. With cooler temperatures, power burn declined by 14% week over week, whereas industrial sector consumption stayed constant, averaging 19.5 Bcf/d. In the residential and commercial sectors, consumption increased by 1%. Natural gas exports to Mexico were down 1%....MUCH MORE