Friday, December 20, 2013

Natural Gas: EIA Weekly Supply Demand Report

For the week ended December 18 total supply was up 4.15% over the same week in 2012 while demand was up 25.9%.
Front futures are down 3 cents at $4.43 and we are leaning lower.

From the EIA:

In the News:

EIA projects robust growth in natural gas production, consumption, and trade

On Monday, EIA published its base case version of its 2014 Annual Energy Outlook (AEO2014). EIA predicted that natural gas production will rise steadily throughout the forecast period, reaching 37.5 trillion cubic feet (Tcf) per year by 2040, an increase of 56% over 2012 levels. This projected increase in production is notably higher than the outlook a year ago in AEO2013, largely the result of higher shale gas production growth. The increase in supply will satisfy higher growth in both domestic consumption and exports.

Shale gas production is expected to double, reaching 53% of all produced volumes by 2040, up from 40% in 2012. As with overall gas production, production from shale plays is higher than in AEO2013 because of an updated, more localized assessment of well recovery and decline rates. Natural gas from tight formations continues to be an important source of supply, as well.

Total domestic natural gas consumption is projected to grow by 6.0 Tcf from 2012 to 2040, when it would equal 44% of the 13.5 Tcf increase in U.S. production. Other highlights...MUCH MORE
Demand Table
U.S. Consumption - Gas Week: (12/11/13 - 12/18/13)

Percent change for week compared with:
last year
last week
U.S. Consumption
Total Demand

And from the CME:
Nat Gas holding yesterday's gains 
Heading into the last trading session of the week the spot Nat Gas contract is still holding onto all of yesterday's gains as the contract inches closer to a test of the $4.50/mmbtu resistance level. Yesterday's all time record inventory withdrawal reminded the market that even with a resurgence in production cold winter like weather certainly has a quick and significant impact on the overall balances. The spot contract is now trading at the highest level since May of this year.

In the very short term a warming trend is engulfing parts of the US which should result in next week's withdrawal from inventory likely to be significantly lower than what we saw in this week's report. However, the latest NOAA six to ten day and eight to fourteen day forecasts both are once again supportive for above normal levels of heating related Nat Gas demand once the short term bout of warm weather moves out of the area.

From Christmas to early January below normal temperatures will move back over major parts of the US resulting in an increase in Nat Gas demand and thus above normal draws from inventory. The Nat Gas market is in overbought territory and susceptible to a round of profit taking selling. That said the projected return to more winter like weather starting next week should serve as a floor on any short term selling in the market.

In the EIA weekly Nat Gas report Gas consumption declines as weather warms. Total natural gas consumption for the report week declined by 8.8% compared with last week, as temperatures recovered from lows reached during last week's cold snap. Residential/commercial sector and electric sector consumption decreased by 8.9% and 15.5%, respectively. The largest percentage decreases in electric-sector consumption of natural gas came from the Midcontinent and Texas, which declined week-on-week by 34% and 58%, respectively. In the Midwest, power sector consumption declined by only 0.3%, after increasing by 183% the previous report week, with temperatures there staying 43% below levels from two weeks ago. Net pipeline exports to Mexico rose 5.7%, due to higher exports from the Southwest, while exports from Texas remained relatively flat.

Total supply recovers over the week. Total natural gas supply rose by 1.2% for the report period. Domestic dry gas production increased by 1.6% above week-ago levels, after declining by 3.4% last week following widespread well freeze-offs concentrated largely in the southwestern United States. Net imports from Canada declined by 3.9%, driven by a 31% decline in Canadian gas imported into the Midwest. LNG imports, a minor part of supply, were up 42%, with a large part of the increased send out coming from the Distrigas LNG terminal in Everett, Massachusetts....MUCH MORE