Weekly Natural Gas Report
NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, February 1, 2012)
Posted by nuenergen on February 2, 2012
Overview:


NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, January 25, 2012)
Posted by nuenergen on January 26, 2012
Overview:


NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, January 18, 2012)
Posted by nuenergen on January 19, 2012
Overview:

Prices:
With few exceptions, natural gas prices dropped substantially at most market locations. The Henry Hub price continued declines from last week, falling 32 cents over the week to end yesterday at $2.49 per MMBtu. Most other pricing points that posted declines fell by similar amounts, in the 20 to 30 cents range. A relatively warm winter so far, as well as higher-than-average storage levels, has put downward pressure on natural gas prices this year.
One major exception to the general price declines this week was the Northeast. Price changes were somewhat mixed, with New England and New York posting relatively large gains and other points declining. Prices at the Algonquin Citygate (which serves Boston) rose on the week by $1.80 per MMBtu, to as high as $7.36 per MMBtu on Friday, January 13, heading into the long holiday weekend. At Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City, prices rose $2.04 per MMBtu on the week, from $3.17 per MMBtu last Wednesday to $5.21 per MMBtu yesterday. Price increases were likely related to cold weather expected for the end of the report week. Pipeline constraints in the Northeast can put upward pressure on prices, causing New York and New England prices to trade at a premium to the Henry Hub.
The Pacific Northwest was the other exception. Prices at the Northwest Sumas trading point, in Washington State, rose by 4 cents on the week from $3.14 to $3.18. The basis spread (the difference between a regional price and the benchmark Henry Hub) rose sharply this week as Sumas increased slightly and the Henry Hub price fell. Cold weather in the Pacific Northwest has likely driven the price increase. While Seattle has been receiving snow, neighboring British Columbia has also been experiencing frigid temperatures, leading to declines in Canadian exports to the West. According to data from BENTEK Energy LLC (Bentek), the West’s imports from Canada fell by almost 11 percent on the week. Power burn in the region increased on the week by about 10 percent.
Both supply and consumption increased this week. Natural gas production remained flat, according to estimates from Bentek, yet remains well above year-ago levels. Overall, imports from Canada increased by about 6 percent, as imports to the Midwest and Northeast offset declines into the West. LNG sendout, while still at very low levels relative to last year, increased by about 7 percent. Total consumption increased by about 20 percent, with power burn and residential/commercial consumption showing the largest increases. These increases were likely weather-related, as consumers and businesses turned on the heat, using natural gas and electric power for space heating. Consumption increased over last year’s levels, as the weather got colder, but still remains below average levels for the week. Residential and commercial consumption averaged 46.8 Bcf per day this week, compared with a 5-year (2007-2011) average of 49.5 Bcf per day.
At the NYMEX, prices dropped to lows not seen in almost 10 years. The near-month (February 2012) futures contract fell from $2.774 per MMBtu last Wednesday to $2.472 yesterday. The 12-month strip, the average of the 12 contracts between February 2012 and January 2013, declined from $3.114 per MMBtu last Wednesday to $2.848 per MMBtu yesterday.
Storage
Working natural gas in storage fell to 3,290 Bcf as of Friday, January 13, according to EIA's WNGSR. This represents an implied net withdrawal of 87 Bcf. Stocks were 566 Bcf higher than the 5-year average level, as well as 539 Bcf higher than last year at this time. Inventories in the Producing Region stand out at 276 Bcf (31.1 percent) above the 5-year average of 888 Bcf. Stocks in the East and West Regions were above their 5-year averages by 224 Bcf (15.2 percent) and 66 Bcf (18.0 percent), respectively.
The implied net withdrawal was 46% lower than the 5-year average withdrawal for the week, likely due to warmer-than-normal weather. In all three regions, the net withdrawals for the week were significantly lower than the 5-year average. The implied net withdrawal of 15 Bcf in the Producing region was 70% lower than the 5-year average. Implied net withdrawals in the East and West Regions were 33% and 48% lower than the 5-year average, respectively.
Temperatures during the week ending January 12 were 9.1 degrees warmer than the 30-year normal temperature and 13.1 degrees warmer than the same period last year. At the national level, the average temperature was higher than the 30-year average by a greater margin than the last 9 weeks of warmer-than-normal temperatures. During the week all regions were warmer than normal, particularly the West North Central and East North Central regions in the Midwest averaging 13.7 and 13.6 degrees warmer than normal, respectively. Heating degree-days nationwide were down 28.8 percent from normal.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, January 11, 2012)
Posted by nuenergen on January 13, 2012
Overview:

Prices:
Movement in the Henry Hub day-ahead price reflected the widespread decline of market prices in this week's cash market by falling 5.1 percent, from $2.96 per MMBtu the previous Wednesday to $2.81 per MMBtu yesterday. As the Spot Prices tab on the left shows, the Henry Hub cash price trended downward as end-use gas markets reduced their weekly consumption.
At the NYMEX, the February 2012 contract fell every day except Friday, from $3.096 per MMBtu last Wednesday to $2.774 per MMBtu yesterday, a drop of 32.2 cents (10.4 percent). Over the same period, the March 2012 natural gas futures contract dropped slightly more, by 32.4 cents per MMBtu, and now stands only 2.9 cents above the February contract, reflecting the effects of continued high natural gas storage levels, strong production, and a mild winter so far this season.
All downstream trading locations responded with lower prices from reduced weather load this week. Spot prices at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, which started the week at $4.55 per MMBtu in anticipation of a passing cold snap, showed a $1.38 per MMBtu price loss over the week (Wednesday to Wednesday) to close at $3.17 per MMBtu (down 30.3 percent). Over the same period, but experiencing different timing of weather patterns, the Chicago citygate spot price registered a smaller 10 cent per MMBtu price loss (from $3.05 per MMBtu last Wednesday), ending the week at $2.95 per MMBtu (down 3.3 percent).
In the midst of relatively warm temperatures for winter, consumption posted an expected decrease for the week. According to estimates from BENTEK Energy, LLC (Bentek), domestic natural gas consumption fell by 7.1 percent from last week. The residential/commercial sector led the decline with an 11.3 percent loss, while the industrial sector tallied a 2.5 percent drop. The power sector posted a 3.3 percent decrease, confirming the generally light weather load.
Despite last week's continuation of small domestic production gain, overall supply was down slightly. According to Bentek estimates, the week's overall average total natural gas supply posted a 0.9 percent decrease from last week's level despite another small advance in dry gas production. Domestic weekly dry gas production averaged 64.1 Bcf per day, 0.1 percent higher than the previous week and 10.3 percent above this time last year. The slight gain in this week's dry gas production was partially offset by an 8.3 percent decrease in imports from Canada, which averaged 5.3 Bcf per day over the period. Imports from Canada stand 31.3 percent below year-ago volumes for the same week. There were also modest supply losses registered in the liquefied natural gas (LNG) arena during the week, where imports averaged 603 million cubic feet (MMcf) per day, remaining 53.5 percent below year-ago levels.
Storage
Working natural gas in storage fell to 3,377 Bcf as of Friday, January 6, according to EIA's WNGSR. This represents an implied net withdrawal of 95 Bcf. Stocks were 491 Bcf higher than the 5-year average level, as well as 398 Bcf higher than last year at this time. In all three regions, stocks are well above last year's and the 5-year average level at this time of the year.
Net storage withdrawals for the West Region were particularly low (3 Bcf) compared to the 5-year average withdrawal of 20 Bcf, likely due to warmer temperatures. The Producing Region stands out at 241 Bcf (25.7 percent) above its 5-year average, while stocks in the East and West Regions were above their 5-year averages by 194 Bcf (12.4 percent) and 56 Bcf (14.4 percent), respectively.
Temperatures during the week ending January 5 were 6.4 degrees warmer than the 30-year normal temperature and 4.6 degrees warmer than the same period last year. This continues the trend seen over the last 8 weeks of warmer-than-normal temperatures at the national level. During the week all regions were warmer than normal, particularly the West North Central region in the Midwest, which averaged 13.4 degrees warmer than normal. The Mountain and the Pacific regions averaged 9.3 and 8.0 degrees warmer than normal, respectively. Heating degree-days nationwide were down 20.7 percent from normal.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, January 04, 2012)
Posted by nuenergen on January 5, 2012
Overview:

Prices:
Despite some significant weather-related price spikes in the Northeast over the New Year's weekend, natural gas prices fell over the report week at most market locations. The Henry Hub price dropped below $3 per MMBtu on Friday and remained there through the balance of the report week to end the week at $2.96 per MMBtu, eleven cents below its value last Wednesday. Frigid weather in the East, contrasted with milder temperatures in other parts of the country, led to a mixed market over the week with little major movement in prices at most locations. The Chicago citygate price declined steadily over the week from $3.16 per MMBtu last Wednesday to $3.05 per MMBtu yesterday. Spot prices at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, which started the week at $5.85 per MMBtu, climbed to $11.83 per MMBtu on Friday, remained above $10 per MMBtu through Tuesday and then dropped to $4.55 per MMBtu yesterday as a warming trend helped abate the freezing temperatures.
Although increasing only slightly over the week, total supply remained 7.6 percent above year-ago levels, signaling the continued strength in domestic production. Imports from Canada increased overall by 2.3 percent from the previous week, with significant increases in volumes delivered to the Northeast (34.4 percent) according to BENTEK Energy, LLC (Bentek). LNG sendout increased by 19.8 percent over the week, with most of the increase coming from Cove Point, likely to satisfy increased weather-related demand in the East.
Total consumption over the report week was up by 2.5 percent according to Bentek, with the highest increases in residential/commercial consumption, up 3.2 percent. Although residential/commercial consumption dropped through Saturday, it picked up significantly on Sunday, and double digit percentage increases were registered on Monday and Tuesday. By Wednesday, demand had begun to drop off, consistent with the weather pattern in the East over the week.
At the NYMEX, the February 2012 contract posted a small decline over the report week, falling from $3.121 per MMBtu last Wednesday to $3.096 per MMBtu yesterday. The contract price fell below $3 per MMBtu over the Holiday weekend, but moved back above the $3 per MMBtu benchmark yesterday. The 12-month strip (the average of the 12 contracts between February 2012 and January 2013) followed a slightly different pattern, declining only slightly during the week and rising overall for the week from $3.348 per MMBtu last Wednesday to $3.400 per MMBtu yesterday.
Storage
Working natural gas in storage fell to 3,472 Bcf as of Friday, December 30, according to EIA's WNGSR. This represents an implied net withdrawal of 76 Bcf, much smaller than the 5-year average draw of 106 Bcf, as well as last year's draw of 135 Bcf. Stocks are well above average in all three regions. Relatively warm weather through the week contributed to the reduced withdrawal.
Inventories at the end of the year were at their highest levels for that week since EIA began tracking storage levels. Large production increases throughout the year and generally mild weather through the first months of the heating season have contributed to the record level. The Producing Region stands out at 499 Bcf (71.7 percent) above the 5-year average.
Temperatures during the week ending December 29 were 4.9 degrees warmer than the 30-year normal temperature and 6.0 degrees warmer than last year. All regions with the exception of the West South Central were warmer than normal. The Midwest was particularly warm, with the East North Central and West North Central regions averaging 7.4 and 10.7 degrees warmer than normal, respectively. Heating degree-days nationwide were down 15.3 percent from normal.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, December 21, 2011)
Posted by nuenergen on December 22, 2011
Overview:

Prices:
Even though today marks the first full day of winter, natural gas prices fell on the report week at most market locations. The Henry Hub price flirted with the sub-$3 per MMBtu mark, but ultimately ranged within $3.01 per MMBtu and $3.08 per MMBtu, ending the week three cents below its value last Wednesday. Although Northeastern prices increased with cold weather, they eventually fell by the end of the report week. Forecasts for colder temperatures across most of the country heading into the weekend, however, could lead to some gains in prices.
Supply fell slightly this week, yet remained 4 percent above year-ago levels, the result of continued strength in domestic production. Imports from Canada fell by 3.2 percent from the previous week, with only the West posting increases from last week, according to Bentek. LNG sendout declined overall this week. Almost all recent LNG sendout has come from the Elba Island LNG terminal in Georgia and the Everett LNG terminal in Boston, according to Bentek. Demand declined on the week despite rising somewhat mid-week.
Rockies prices this week were generally an exception to the net declines seen in other parts of the country. Prices in the Rockies jumped in the second half of the report week, as snow and cold temperatures hit the area. The spot price at the Opal Hub in Wyoming, a proxy for Rockies prices, rose from $3.02 per MMBtu last Wednesday to $3.18 per MMBtu yesterday. According to data from Bentek, demand for power and residential and commercial heating climbed to 3.7 Bcf, a 0.8 Bcf increase from the previous day. Forecasts for colder temperatures likely drove up the Rockies prices at the end of the week. Although the Ruby Pipeline, which moves Rockies natural gas west, came back online this week after force majeure, Rockies outflows declined.
At the NYMEX, the January 2012 contract posted a small gain over the report week, rising from $3.136 per MMBtu last Wednesday to $3.155 per MMBtu yesterday. The contract recovered losses from earlier in the week; on Monday, the contract ended the day at $3.096 per MMBtu. The 12-month strip (the average of the 12 contracts between January and December 2012) followed a similar pattern, rising from $3.405 per MMBtu last Wednesday to $3.430 per MMBtu yesterday.
Storage
Working natural gas in storage fell to 3,629 Bcf as of Friday, December 16, according to EIA's WNGSR. This represents an implied net withdrawal of 100 Bcf, slighty less than the previous week. The draw was much smaller than the 5-year average draw of 140 Bcf as well as last year's draw of 181 Bcf.
For the second week in a row, the West Region saw a relatively large draw. While the East and Producing Regions continue to draw less gas compared to historical averages, the West Region drew significantly more. Slightly colder weather combined with a temporary outage to the Ruby Pipeline, which carries gas to the region, are likely responsible. All regions remain well above 5-year average levels.
Temperatures during the week ending December 15 were 1.9 degrees warmer than the 30-year normal temperature and 5.7 degrees warmer than last year. All regions except the Mountain and Pacific experienced relatively warm temperatures during the week. Those two regions, largely comprising the West storage region, were respectively 1.0 and 3.1 degrees colder than the 5-year average. Nationwide, heating degree-days were down 6.2 percent from average and 17.3 percent from last year.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, December 14, 2011)
Posted by nuenergen on December 15, 2011
Overview:

Prices:
Movement in the Henry Hub day-ahead price reflected the widespread decline of market prices in this week's cash market by falling 10.7 percent from $3.45 per MMBtu the previous Wednesday to $3.08 per MMBtu yesterday. As the accompanying table on the left shows, the Henry Hub cash price progressed steadily downward with five days of consecutive losses even though end-use markets increased their weekly gas consumption modestly.
At the NYMEX, the January 2012 contract fell every day except Tuesday, from $3.421 per MMBtu last Wednesday to $3.136 per MMBtu yesterday, a drop of 28.5 cents (8.3 percent). Over the same period, the February 2012 natural gas futures contract dropped slightly less, by 27.1 cents per MMBtu, and now stands only 5.1 cents above the January contract, possibly reflecting the effects of high natural gas storage levels and continued strong production.
All downstream trading locations responded with lower prices from reduced weather load this week. Spot prices at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, which started the week at $3.94 per MMBtu, showed a 58 cent per MMBtu price loss over the week (Wednesday to Wednesday) to close at $3.36 per MMBtu (down 14.7 percent). Over the same period, the Chicago citygate spot price registered a somewhat smaller 39 cent per MMBtu price loss (from $3.60 per MMBtu last Wednesday) and ended the week at $3.21 per MMBtu (down 10.8 percent).
In the midst of somewhat seasonal, but not especially cold temperatures, consumption posted a modest increase for the week. According to estimates from Bentek, domestic gas consumption increased by 7.9 percent over last week. The residential/commercial sector led the increase with a 12.3 percent gain while the industrial sector tallied a 2.6 percent increase. The power sector posted a 5.0 percent increase indicating a building, but still generally light, weather load.
Despite last week's continued production erosion and clear price slide, overall supply was up slightly. According to Bentek estimates, the week's overall average total gas supply posted a 0.9 percent increase from last week's level despite another softening in dry gas production. Domestic weekly dry gas production averaged 63.3 Bcf per day, 0.5 percent lower than the previous week, but 7.7 percent above this time last year. The slight fall in this week's dry gas production was partially offset by a 17.5 percent increase in imports from Canada, which averaged 6.1 Bcf per day over the period. Imports from Canada stand 22.1 percent below year-ago volumes for the same week. There were also modest supply gains registered in the liquefied natural gas (LNG) arena during the week, where imports averaged 787 million cubic feet (MMcf) per day but remained 40.9 percent below year-ago levels.
Storage
Working natural gas in storage fell to 3,729 Bcf as of Friday, December 9, according to EIA's WNGSR. This represents an implied net withdrawal of 102 Bcf, much smaller than both the 5-year average withdrawal of 142 Bcf and last year's 154 Bcf draw. Stocks are now 347 Bcf above the 5-year average and 154 Bcf above last year.
After three weeks of small builds, the West Region saw a major draw last week, with storage dropping by 24 Bcf. This was the only region to exceed the average draw for the week. Unusually cold temperatures throughout much of the region increased heating demand. The next several weeks could also see relatively large draws in the West due to a fire and resulting outage in the Ruby Pipeline, which moves gas into the region.
Temperatures during the week ending December 8 were 1.0 degrees warmer than the 30-year normal temperature and 5.9 degrees warmer than last year. While the overall temperatures were warm during the week, regional differences were very large. The Mountain Region averaged just 27.1 degrees, 7.3 degrees colder than normal, while New England averaged 43.0 degrees, 8.1 degrees warmer than normal. Heating degree-days for the week were down only 3.9 percent from normal, but down 18.3 percent from last year.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, December 7, 2011)
Posted by nuenergen on December 8, 2011
Overview:

Prices:
Despite forecasts for substantially colder temperatures near the end of the report week across most parts of the country, natural gas price changes at the end of the report week were still somewhat mixed. The Henry Hub price rose only 2 cents on the last day of the report week, from $3.43 per MMBtu on Tuesday to $3.45 per MMBtu yesterday.
Despite a relatively strong end-of-week rally, prices in the Northeast posted a net decline for the week. Forecasters warned that rain across the East Coast on Wednesday, December 7, could become snow, with storms hitting New England the hardest. At Transcontinental Pipeline's Zone 6 pricing point for delivery into New York City, the spot price began the report week at $4.11 per MMBtu last Wednesday, before dropping to an intra-week low of $3.64 per MMBtu on Friday. Colder weather in the region helped boost prices at Zone 6 to $3.94 per MMBtu yesterday. The largest end-of-week rallies were seen in New England, with prices at Dracut, Massachusetts, and the Algonquin Citygate (serving Boston) rising more than 30 cents yesterday.
Rockies prices also saw some gains near the end of the report week. From Tuesday to Wednesday the spot price at the Opal Hub rose 8 cents to $3.60 per MMbtu, and posted an overall gain for the week of 6 cents. Opal prices, usually somewhat below the Henry Hub prices, have risen above Henry Hub in the past several weeks. Outflows on the Rockies Express Pipeline are down more than 50 percent this month compared to December 2010, according to data from Bentek. Below-normal temperatures have led to high demand in the region, and in the past few days, an outage on a compressor station on Enterprise's Jonah Gathering System has curtailed Rockies production by about 0.5 Bcf per day.
Consumption of natural gas rose this week, in conjunction with reduced supply. Domestic consumption rose 18.4 percent, according to data released by Bentek, with larger gains near the end of the report week. The largest gains came from the residential and commercial sectors, as well as the electric power sector. Production fell on the week, as a result of early seasonal freeze-offs as well as maintenance issues affecting some Western pipeline infrastructure systems. Both LNG sendout and imports from Canada rose on the week to accommodate increased demand for heating.
At the New York Mercantile Exchange, the January 2012 futures contract fell from $3.550 per MMBtu last Wednesday to $3.421 per MMBtu yesterday. Futures prices are below their year-ago levels; as of December 7 last year, the January 2011 futures contract had ranged from $4.180 per MMBtu to $4.488 per MMBtu during its tenure as the near-month contract. This week, the 12-month strip (the average of the 12 contracts between January 2012 and December 2012) fell to $3.651 per MMBtu yesterday, from $3.754 per MMBtu last Wednesday.
Storage
Working natural gas in storage fell to 3,831 Bcf as of Friday, December 2, according to EIA's WNGSR. This represents an implied net withdrawal of 20 Bcf. The withdrawal was much smaller than both the 5-year average withdrawal of 66 Bcf and last year's 79 Bcf draw. Stocks are now 307 Bcf above the 5-year average and 102 Bcf above last year.
The West Region has not had a net withdrawal in the past three weeks. The previous week's withdrawal was confined to the East Region while the other two regions continued to add natural gas to storage. This week saw a modest withdrawal in the Producing Region of 5 Bcf, and another slightly larger draw in the East Region of 16 Bcf. All three regions remain well above average levels, but the Producing Region stands out at 169 Bcf (16 percent) above average. Some of the relatively small draw can be attributed to abnormally high temperatures in most of the country as well as high production during the storage report week.
Temperatures during the week ending December 1 were 5.1 degrees warmer than the 30-year normal temperature level and 6.6 degrees warmer than last year. In fact, temperatures were slightly warmer than the previous week. Every region of the country except the West South Central was warmer than normal. The Northeast was warmest relative to normal with New England 10.7 degrees above average and the Middle Atlantic 10.0 degrees above. Heating degree-days were down 22.2 percent from normal and 26.6 percent from last year.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, November 30, 2011)
Posted by nuenergen on December 1, 2011
Overview:

Prices:
Likely due to forecasts for moderate temperatures and expected reduced demand going into a holiday weekend, prices at most pricing locations across the country were below $3 per MMBtu the day prior to Thanksgiving. On Monday, November 21, the Henry Hub price closed at $2.94 per MMBtu, falling below $3.00 per MMBtu for the first time since November 16, 2009. By Wednesday, the day before Thanksgiving and the start of this report week, it had declined another 10 cents to close at $2.84 per MMBtu. Going into the holiday weekend most pricing points across the country were under $3.00 per MMBtu, and most prices along the Gulf Coast were under $2.80 per MMBtu. Mild holiday weekend temperatures were replaced with considerably cooler temperatures by the beginning of the week, and on Monday essentially all pricing points were back above $3.00 per MMBtu. Across the board increases continued as temperatures continued to drop, and most points closed yesterday above $3.50 per MMBtu. Prices over the report week at the Henry Hub increased from $2.84 to $3.53 per MMBtu. At the Transco Zone 6 pricing point for delivery into New York City, the price climbed from $2.99 to $4.11 per MMBtu. The Algonquin Citygate price (servicing Boston) posted a 20 percent increase, beginning the week at $3.72 per MMBtu and closing yesterday at $4.46 per MMBtu.
At the NYMEX, the January 2012 contract moved into the near-month position and oscillated over the report week from a high of $3.655 per MMBtu to a low of $3.525 per MMBtu, closing yesterday at $3.550 per MMBtu, down 5.8 cents (1.6 percent) from $3.608 per MMBtu last Wednesday. The December 2011 contract expired on Monday (November 28) at $3.364 per MMBtu. The 12-month strip remained relatively even over the week, beginning the week at $3.728 per MMBtu and closing the week yesterday at $3.754 per MMBtu.
Although consumption over the Thanksgiving weekend remained relatively low, overall consumption showed considerable daily increases from Sunday through the remainder of the report week. Bentek reported the lowest consumption level for the week of 58 Bcf on Saturday, which was followed by average daily increases of over 15 percent beginning Sunday and continuing through the end of the report week (yesterday). Bentek reported yesterday's consumption at 73 Bcf, an increase of more than 25 percent over Saturday's low. The increases were primarily a result of high residential/commercial demand in the South due to unseasonable cold temperatures. In spite of the end-of-week increases, average overall domestic consumption for the week posted a 6 percent decrease over the previous report week. The declines were mostly in residential/commercial consumption, which saw a 7.2 percent drop, and in gas used for power generation, which posted a 10.3 percent decline.
In spite of average weekly declines in prices and demand, dry gas production increased over the report week by 1.2 percent and was 9.4 percent above year-ago volumes for the same week. According to Bentek estimates, daily production for the week was consistently near 65 Bcf. The 1.2 percent increase over the previous week was partly offset by declines in Canadian and LNG imports of 0.7 and 8.9 percent, respectively. Canadian and LNG imports are 17.6 and 51.9 percent respectively below year-ago volumes for the same week. Canadian imports averaged 4.4 Bcf per day over the week and LNG imports averaged 0.3 Bcf per day.
Storage
Working natural gas in storage fell to 3,851 Bcf as of Friday, November 25, according to EIA's WNGSR. This represents an implied net withdrawal of 1 Bcf, the first withdrawal of the 2011-2012 winter heating season. The withdrawal was considerably smaller than both the 5-year average withdrawal of 29 Bcf and last year's 21 Bcf draw. Stocks are now 261 Bcf and 41 Bcf above the 5-year average and last year, respectively.
The regional breakdown shows that the East Region was actually the only region with a net withdrawal during the week. This net withdrawal occurred despite relatively warm weather in the East Region during the week. The West and Producing Regions built by 2 Bcf and 14 Bcf, mostly offsetting the draw in the East Region. All three regions remain well above average levels, but the Producing Region stands out at 159 Bcf (14 percent) above average.
Temperatures during the week ending November 24 were 2.6 degrees warmer than the 30-year normal temperature level. Although the temperature fell 3.4 degrees from the previous week, every region of the country except the Pacific Region experienced warmer than normal weather. Nationwide, heating degree-days were down about 11 percent from normal and 4 percent from last year.

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, November 16, 2011)
Posted by nuenergen on November 17, 2011
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Prices |
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Movement in the Henry Hub day-ahead price reflected the decline of other trading locations in this week’s cash market by falling 12.4 percent from $3.55 per MMBtu the previous Wednesday to $3.11 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price progressed steadily downwards with five days of consecutive losses as end-use markets cut back on immediate gas consumption. |
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At the NYMEX, the December 2011 contract fell 30.8 cents (8.4 percent) over five consecutive days from $3.652 per MMBtu last Wednesday to $3.344 per MMBtu yesterday. Over the same period, the January 2012 and February 2012 natural gas futures contracts dropped 26.6 cents and 26.5 cents per MMBtu, respectively, illustrating the potential impacts high storage levels coupled with continued robust production could have on gas prices this coming winter. |
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Storage |
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Working natural gas in storage rose to 3,850 Bcf as of Friday, November 11, according to EIA’s WNGSR (see Storage Figure). This represents an implied net injection of 19 Bcf, higher than the 5-year average injection of 10 Bcf and last year’s draw of 1 Bcf. Weekly stocks reached an all time high, surpassing the previous weekly record of 3,840 Bcf from November 5, 2010. |
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Other Market Trends |
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Rig Count Drops to 877. The natural gas rotary rig count declined by 30 to 877 for the week ending November 11, 2011, according to data released by Baker Hughes Incorporated. This is the second consecutive decline, and this week’s decline follows another relatively large decline of 27 rigs posted last week. The natural gas rig count has fallen back to its lowest level since July 29, 2011. Natural gas rigs currently are far below levels close to 1,600 reached in the fall of 2008, but production has continued to rise. Some of the increases in production are from natural gas associated with oil production; oil rigs are currently at 1,133, and have steadily increased for the past couple of years. Efficiency gains, specifically in shale drilling, have also likely buoyed production levels in spite of declines in the rig count. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, November 09, 2011)
Posted by nuenergen on November 10, 2011
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Prices |
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Cash prices around much of the country, with a few exceptions, posted gains over the week. The Henry Hub price dropped overall from $3.39 per MMBtu last Wednesday to $3.55 yesterday, but movements during the week were mixed. On the last couple of days of trading in the report week, many pricing points around the country rallied slightly. The Henry Hub gained a total of 20 cents in these last two days. |
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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.
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Storage |
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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. |
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Other Market Trends |
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Utica Shale Attracts Infrastructure Investment. Recently Caiman Energy announced it would build two short pipelines under the Ohio River to bring “wet” (liquids rich) natural gas from the Utica Shale in Ohio to the company’s processing plant in Marshall County, West Virginia. The company will commit $30 million, and such infrastructure investment is another sign of the importance of natural gas liquids in driving domestic production. The Utica Shale is located in the Northeast, and is situated about 8,000 feet below the surface of the Earth, and underneath the Marcellus shale. The Utica is primarily located beneath Pennsylvania, West Virginia, New York, and Ohio, which has recently been a major area of investment and interest. While currently, oil and natural gas production out of the State of Ohio remains small, several companies have made substantial investments, and permitting in the State (specifically in the eastern part of the State, where the Utica shale is located) has expanded. Some key developments and facts: |
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Short-Term Energy Outlook Projects Continued Natural Gas Supply Growth. EIA released the Short-Term Energy Outlook (STEO) on November 8, with projections through the end of 2012. The latest STEO is also presented in a new, redesigned, interactive format. Among natural gas highlights this month: |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, November 02, 2011)
Posted by nuenergen on November 3, 2011
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Most trading locations across the country saw declining prices over the week, with the Henry Hub price falling from $3.65 per MMBtu last Wednesday to $3.39 per MMBtu yesterday. Slight upticks on Friday and Monday gave way to larger declines for the rest of the report week. The Northeast, where an early season snowfall moved in and propelled prices upward going into and over the weekend, was a departure from the overall decline. A price increase of 39 cents per MMBtu was posted at the Algonquin citygate in Massachusetts last Friday, and it increased another 12 cents over the weekend to reach a high of $5.00 per million Btu on Monday. As prices at other locations continued to fall throughout the week, prices in the Northeast did not ease off until Tuesday. By yesterday, the Algonquin citygate price had retreated to $4.19 per MMBtu. |
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While most trading locations, including the Northeast, continued to decline towards the end of the report week, price increases at several Rocky Mountain and Midcontinent pricing points yesterday made them the exception to the rule. These pricing points were likely responding to a large weather system heading south out of Canada. The most notable increase was a 43 cent spike at the Northwest Sumas pricing point. This was its first price spike of the season and came particularly early. The higher prices in this part of the country caused strong increases in Ruby pipeline flows, which reached a record flow level of 1.0 Bcf per day, according to BENTEK Energy Services, LLC (BENTEK). Increased flows to the West on Ruby coincided with a drop in the Rockies Express Pipeline (REX) outflows to the East, which registered flows below 1.1 Bcf per day. Natural gas flows on REX fell to their lowest levels since early February, according to BENTEK.
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Working natural gas in storage rose to 3,794 as of Friday, October 28, according to EIA’s WNGSR (see Storage Figure). This represents a 78 Bcf implied net injection. Inventories are now 17 Bcf below their year-ago levels and 201 Bcf above the 5-year (2006-2010) average. The East region injected 32 Bcf; the West, 7 Bcf; and the Producing region, 39 Bcf. The Producing region is the only one of the three regions above its year-ago levels, but all three regions remain above their 5-year average levels. |
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Tennessee Pipeline Line 300 Goes Into Service. Tennessee Gas Pipeline, a subsidiary of El Paso Corporation, placed into service its Line 300 expansion project, consisting of seven looping segments in Pennsylvania and New Jersey totaling about 127 miles added onto Tennessee’s existing system. In addition, 5500 horsepower was added to the system via two new compressor stations and upgrades at seven existing stations. The project is intended to transport natural gas produced in the growing Marcellus Shale region, and it is one of many projects planned for the area to accommodate further expected increases in production. The project increases capacity by 350 MMBtu per day. As soon as the pipeline went into service, prices rose at Tennessee’s Zone 4 Line 300 pricing point, where abundance of supplies and lack of takeaway capacity had led to depressed prices. Prices at the Line 300 station rose to $3.40 per MMBtu the day it went into service, from levels in the $1–$2 per MMBtu range (falling to just 97 cents per MMBtu on October 31). The pipeline goes through Northeast Pennsylvania, through areas of robust production, including Bradford and Susquehanna Counties. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, October 26, 2011)
Posted by nuenergen on October 27, 2011
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Movement in the Henry Hub day-ahead price reflected the increase of most other trading locations in this week’s cash market by rising just under 2 percent from $3.58 per MMBtu the previous Wednesday to $3.65 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price progressed steadily upwards starting last Friday as end-use markets responded to prospects of approaching chillier weather late this week. |
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In spite of generally mild fall temperatures prior to the arrival of the expected chillier weather, consumption posted a modest increase for the week. According to estimates from BENTEK Energy Services, LLC (BENTEK), domestic gas consumption increased by 3.0 percent over last week. The residential/commercial sector registered a double-digit percent increase while the industrial sector tallied a 1.8 percent increase. However, the power sector posted a generally offsetting 9.0 percent drop reflecting the light weather load at the end of last week. |
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Working natural gas in storage rose to 3,716 Bcf as of Friday, October 21, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 92 Bcf from the previous week, stocks are now 28 Bcf below last year and 158 Bcf above the 5-year average. The injection was much larger than the 5-year average injection of 47 Bcf and last year’s injection of 74 Bcf. |
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Kitimat LNG Receives Export License. Earlier this month, Canada’s National Energy Board (NEB) approved an application for KM LNG Operating General Partnership to export LNG from its proposed facility in Kitimat, British Columbia. The export license allows for export of up to 468 Bcf of natural gas per year over 20 years to Asian countries. Natural gas to supply the facility will be sourced from the Western Canada Sedimentary Basin. According to the NEB, this is the first LNG export license the board has considered since deregulation of the natural gas market in 1985. The terminal is a partnership between Apache Canada (the operator), EOG Resources Canada, and Encana. Construction on the facility is expected to begin in early 2012, with operations beginning in 2015. According to a recent BENTEK Energy analysis, the location of the Kitimat facility is optimally located for access to premium markets in Asia and could compete with new LNG projects in Australia. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, October 19, 2011)
Posted by nuenergen on October 20, 2011
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Henry Hub prices posted only slight increases over the week. Although projections of significantly cooler temperatures in the Midwest and other portions of the country likely caused prices to rise at all points but one on Monday, they retreated at most points on Tuesday and Wednesday, with the Henry Hub price closing the report week out at $3.58 per MMBtu, only a slight increase over last Wednesday’s $3.54 per MMBtu. Monday’s rally saw gains at the Chicago citygate, Transcontinental’s Zone 6 (Transco Z6) point for delivery into New York, and the Henry Hub of 29, 31, and 23 cents, respectively. Although prices at Transco Z6 and the Henry Hub subsequently declined, the Chicago citygate price remained high, closing yesterday 2 cents above Monday’s closing price, likely due to forecasts of cold weather. |
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At the New York Mercantile Exchange, the price of the near-month contract (November 2011) increased about 10 cents, from $3.489 per MMBtu last Wednesday to $3.586 per MMBtu yesterday. The price of the 12-month strip increased slightly, from $3.948 per MMBtu last Wednesday to $3.956 per MMBtu yesterday. All of the contracts in this year’s winter strip (November 2011–March 2012) settled below $4 per MMBtu on Wednesday. |
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Working natural gas in storage rose to 3,624 Bcf as of Friday, October 14, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 103 Bcf from the previous week, stocks are now 46 Bcf below last year and 113 Bcf above the 5-year average. The injection was much larger than the 5-year average injection of 58 Bcf and last year’s injection of 93 Bcf. |
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CFTC Finalizes Position Limits Rules. On Tuesday, October 18, the Commodity Futures Trading Commission (CFTC) passed regulations on position limits for futures and swaps by a 3-2 vote. The regulations established limits on speculative positions in 28 commodities, including NYMEX Henry Hub Natural Gas, NYMEX Light Sweet Crude Oil, NYMEX New York Harbor Gasoline Blendstock, and NYMEX New York Harbor Heating Oil. The rule was implemented in response to the October 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the CFTC to establish speculative position limits. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, October 12, 2011)
Posted by nuenergen on October 13, 2011
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For the most part, moderate weather across most of the country helped to push prices downward. Power burn rose only slightly during the week, about 0.6 percent, according to estimates from BENTEK Energy Services, LLC. The increase in power burn, however, was offset by large declines in residential and commercial consumption, leading to an overall decline in consumption of about 3.3 percent. The Henry Hub spot price fell from $3.63 per MMBtu last Wednesday to $3.54 per MMBtu yesterday. |
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At the New York Mercantile Exchange, the price of the near-month contract (November 2011) fell about 8 cents, from $3.570 per MMBtu last Wednesday to $3.489 per MMBtu yesterday. The price of the 12-month strip also fell, from $4.047 per MMBtu last Wednesday to $3.948 per MMBtu yesterday. All of the contracts in this year’s winter strip (November 2011–March 2012) settled below $4 per MMBtu on Wednesday. On October 12, 2010, the price of the November 2010 near month contract was $3.629 per MMBtu, and the 12-month strip was $4.248 per MMBtu. |
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Working natural gas in storage rose to 3,521 Bcf as of Friday, October 7, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 112 Bcf from the previous week, stocks are now 56 Bcf below last year and 68 Bcf above the 5-year average. The injection was much larger than the 5-year average injection of 72 Bcf and last year’s injection of 90 Bcf. |
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Winter Fuels Outlook Projects Higher Natural Gas, Propane, and Heating Oil Expenditures this Winter. On October 12 EIA released the Short-Term Energy Outlook and Winter Fuels Outlook, which projects that expenditures for natural gas, propane, and heating oil will increase by 3 percent, 7 percent, and 8 percent, respectively, from last winter. Expenditures for electricity, on the other hand, are expected to fall slightly. Though the winter (October 1, 2011–March 31, 2012) is projected to be about 2 percent warmer than last winter, according to the National Oceanic and Atmospheric Administration, temperatures will vary widely by region. Among the highlights: |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, October 5, 2011)
Posted by nuenergen on October 6, 2011
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The movement in the Henry Hub day-ahead price mirrored the fall of other trading locations in this week’s cash market by slumping 6.4 percent from $3.88 per MMBtu the previous Wednesday to $3.63 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price progressed in an unwavering downward trend every day of the week until yesterday when a modest rally occurred spawned by expectations of increasingly low overnight temperatures. |
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At the NYMEX, the November 2011 contract decreased 22.9 cents (6.0 percent) from $3.799 per MMBtu last Wednesday to $3.560 per MMBtu yesterday. The contract dropped 18.2 cents from Thursday through Monday on the higher-than-average triple-digit storage build last week, a rebounding gas-directed rig count, and fading weather loads—either cooling or heating. |
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Working natural gas in storage rose to 3,409 Bcf as of Friday, September 30, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 97 Bcf from the previous week, stocks are now 78 Bcf below last year and 28 Bcf above the 5-year average. The injection was much larger than the 5-year average injection of 74 Bcf and last year’s injection of 84 Bcf. |
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Natural Gas Rig Count Rises to 923. The natural gas rotary rig count rose by 11 to 923 as of September 30, according to data reported by Baker Hughes Incorporated. This is the highest value since December 22, 2010. The oil rig count, on the other hand, fell by 11 during the week but it remains at a historically high level of 1,060. Compared to the same time a year ago, the natural gas rig count has dropped 4 percent, while the oil rig count has risen by 54 percent. The increase in oil rigs is likely related to increases in oil prices year over year. Though natural gas rigs have fallen year over year (and declined substantially from record highs in 2008), production has continued to rise. This is likely a combination of increases in associated production from the oil rigs, as well as increases in production per rig. Vertical rigs (including both oil and natural gas) rose during the week, from 609 to 617, their highest level since 2009. Horizontal rigs (also including both oil and natural gas) fell by 5 to 1,035. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, September 29, 2011)
Posted by nuenergen on September 30, 2011
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Prices at most trading locations oscillated over the report week, declining between last Wednesday and the weekend, then increasing through Tuesday and subsequently dipping on the last day of the report week. Although prices were up and down over the week, most closed higher than the preceding week. The Henry Hub price declined from $3.78 per MMBtu last Wednesday to a low for the report week of $3.72 per MMBtu on Thursday, increased to $3.92 per MMBtu on Tuesday and then declined, closing at $3.88 per MMBtu yesterday. Prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City fell from $4.03 per MMBtu last Wednesday to $3.91 per MMBtu on Friday, jumped to $4.20 per MMBtu by Tuesday, and then closed at $4.13 per MMBtu yesterday. Similarly, the Chicago citygate price declined from $3.88 per MMBtu last Wednesday to $3.80 per MMBtu on Thursday, then climbed to $3.98 per MMBtu Tuesday, only to reverse direction and fall to $3.91 per MMBtu yesterday. |
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At the NYMEX, the November 2011 contract moved into the near-month spot, and dropped from $3.820 per MMBtu last Wednesday to $3.799 per MMBtu yesterday. The October contract closed at $3.759 per MMBtu yesterday, up only slightly from its 3.730 close last Wednesday. The 12-month strip (the average of the 12 contracts between November 2011 and October 2012) remained relatively steady over the week, closing at $4.133 per MMBtu last Wednesday and $4.136 per MMBtu yesterday. |
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Working natural gas in storage rose to 3,312 Bcf as of Friday, September 23, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 111 Bcf from the previous week, stocks are now 91 Bcf below last year and 5 Bcf above the 5-year average. The injection was much larger than the 5-year average injection of 71 Bcf and last year’s injection of 73 Bcf. |
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Global Tightness in LNG Markets Draws Cargoes Away from the United States. Maintenance on LNG terminals and declines in production from major LNG exporting countries has led to current tightness in global LNG markets, according to recent reports from BENTEK Energy Services, LLC. Both Qatar and Trinidad have announced maintenance on facilities this fall, and, according to BENTEK, the Qatar maintenance could take 1 Bcf/d off the market through November. Prices in Asian markets, which are often much greater than U.S. prices, remain high, with reported prices in Japan averaging in the $17 per MMBtu range. U.S. LNG imports are expected to remain low, as low U.S. prices will not attract LNG onto the pipeline grid, but facilities capable of re-export may be further utilized. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, September 14, 2011)
Posted by nuenergen on September 15, 2011
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At the NYMEX, the October 2011 contract increased 9.9 cents (2.5 percent) from $3.940 per MMBtu last Wednesday to $4.039 per MMBtu yesterday. The contract surged 15.4 cents over Tuesday and Wednesday in a possible mind set shift to hopes of more Winter-like loads occurring later in the future despite indications of continued robust short-term production and lack of near-term supporting weather loads. |
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The Henry Hub price echoed the week’s general cash market price increase to recapture the $4 handle by rising 1.2 percent from $3.96 per MMBtu the previous Wednesday to $4.01 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price meandered in a narrow 3 to 4 cent range most of the week before advancing 9 cents the last two days. On Monday and Tuesday, the Henry Hub price was less than the NYMEX October futures contract which could have been an incentive to spur purchase of attractively-priced gas for storage and served to close the gap with the NYMEX futures price. |
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Working natural gas in storage rose to 3,112 Bcf as of Friday, September 9, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 87 Bcf from the previous week, stocks are now 140 Bcf below last year and 52 Bcf less than the 5-year average. The injection was less than last year’s build of 96 Bcf but larger than the 5-year average injection of 79 Bcf. |
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BOEMRE Reorganization to be Completed in October. The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) will divide into two entities in October, according to notices released by the agency. This will complete a plan announced in May 2010 to divide the former Minerals Management Service (MMS) into three agencies (the first phase of the plan was completed a year ago with transfer of revenue collection functions). The revenue collection agency, the Bureau of Ocean Energy Management (BOEM), will be responsible for managing development of offshore resources, while the new Bureau of Safety and Environmental Enforcement (BSEE) will enforce safety and environmental regulations. The division of the agencies separates resource management from safety oversight and strengthens the role of environmental review in the agency. In May 2010, the MMS was reorganized and split into three entities: one that would handle revenue collection and royalty issues; a second to ensure responsible development of offshore resources; and a third to enforce safety and environmental regulations. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, September 07, 2011)
Posted by nuenergen on September 8, 2011
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After jumping last Thursday in response to the threat imposed by slow-moving Tropical Storm Lee, prices at most trading locations fell through most of the remainder of the report week, as cooler temperatures across the country overshadowed impacts of Lee-related shut-in production. The Henry Hub price jumped from $3.97 per MMBtu last Wednesday to $4.18 per MMBtu on Thursday and then declined steadily, with the exception of a slight uptick at the end of the report week, closing at $3.96 per MMBtu yesterday. The price declines were likely the result of forecasts for cooler weather. Prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City followed a similar pattern (as did most of the rest of the country), jumping from $4.21 per MMBtu last Wednesday to $4.40 per MMBtu on Thursday and subsequently settling at $4.20 per MMBtu yesterday. |
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The October 2011 contract fell from $4.054 per MMBtu last Wednesday to $3.940 per MMBtu yesterday. After dropping 17.8 cents last Friday to a low for the week of $3.872 per MMBtu, yesterday’s $3.940 per MMBtu close represented a rebound of 2 percent from Friday’s low as the market evaluated whether Lee-related shut-ins and the threat imposed by Tropical Storm Nate, among other factors, were significant enough to move prices back to the $4 and above range. The 12-month strip (the average of the 12 contracts between October 2011 and September 2012) dropped from $4.431 on August 31 to $4.318 yesterday. |
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Working natural gas in storage rose to 3,025 Bcf as of Friday, September 2, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 64 Bcf from the previous week, stocks are now 131 Bcf below last year and 60 Bcf less than the 5-year average. The injection was above last year’s build of 58 Bcf and equal to the 5-year average injection of 64 Bcf. |
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Production Shut-Ins from Tropical Storm Lee Continue. As of September 7, 2011, oil and natural gas production was returning to normal, with personnel yet to return to 21 production platforms (3.4 percent of the total) and 4 rigs (5.7 percent). Currently, about 516,000 barrels of oil per day and 958 MMcf of natural gas per day are shut in, according to the Board of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). At their peak, according to BOEMRE, about 2,900 MMcf of natural gas production per day (or 54.6 percent) and 859,000 barrels of oil production per day (or 61.4 percent) were shut in. BENTEK Energy noted that, even as all shut-in production returns (likely today), other constraints, including possibly damaged platforms and other unrelated maintenance projects, will likely put downward pressure on production. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, August 31, 2011)
Posted by nuenergen on September 1, 2011
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Prices at most trading locations fell through most of the report week, then jumped on Wednesday. The Henry Hub price dropped from $4.10 per MMBtu last Wednesday to a low for the report week of $3.85 per MMBtu on Tuesday, and back up to $3.97 per MMBtu yesterday. The mid-week price declines resulted from forecasts for cooler weather and continued power outages from Hurricane Irene, which later was downgraded to Tropical Storm Irene. Decreasing every day of the report week but the last day, prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City dropped from $4.35 per MMBtu last Wednesday to $4.08 per MMBtu on Tuesday. This pattern was similar across the country. |
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The October 2011 contract moved into the near-month spot, and rose from $3.889 per MMBtu last Wednesday to $4.054 per MMBtu yesterday. The September contract closed at $3.857 per MMBtu on August 29, having lost 38.7 cents, or about 9 percent, during its tenure as the near-month contract. When the October contract settled yesterday at $4.054 per MMBtu, this was the first time in over two weeks that the near-month contract closed above $4 per MMBtu. The 12-month strip (the average of the 12 contracts between October 2011 and September 2012) rose from $4.421 on August 24 to $4.431 yesterday. |
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Working natural gas in storage rose to 2,961 Bcf as of Friday, August 26, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 55 Bcf from the previous week, stocks are now 137 Bcf below last year and 60 Bcf less than the 5-year average. The injection was between last year’s build of 52 Bcf and the 5-year average injection of 60 Bcf. |
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Demonstrated peak working gas capacity rises to 4,103 Bcf. On August 31, EIA released its most recent estimates of natural gas storage capacity and historical maximum storage volumes. As of April 2011, demonstrated peak working gas capacity (the sum of the highest monthly storage inventory level of working gas observed in each facility over the prior 5-year period) was 4,103 Bcf, a 1 percent increase from the same level the previous year. Design capacity (which represents the sum of a field’s working gas capacity, and is based on physical characteristics of the reservoir) rose to 4,388 Bcf, also an increase of 1 percent from the previous year’s level of 4,353 Bcf. The Producing Region was a major source of capacity increases, adding 43 Bcf (or 80 percent) of peak working gas capacity and 23 Bcf (or 66 percent) of working gas design capacity. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, August 24, 2011)
Posted by nuenergen on August 25, 2011
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At the NYMEX, the price response of the September 2011 contract diverged from the cash market over the week and decreased 1.1 cents (0.2 percent) from $3.933 per MMBtu last Wednesday to $3.922 per MMBtu yesterday. The contract surged 10.4 cents late in the day on Tuesday, likely over speculation as to the number of nuclear generating plants the East Coast earthquake may have removed from service along with pipeline outages. When news became clear on Wednesday about minimal infrastructure impacts, and with the looming threat of approaching Hurricane Irene possibly bring cooling rains and power outages to the East Coast thwarting natural gas consumption, this expiring contract (expires Monday, 8/29/2011) quickly gave back most of the prior day gain. To provide a longer-term perspective, this futures contract began life at $6.333 per MMBtu (11/29/2005) and posted a life-of-contract high price of $10.510 per MMBtu (7/1/2008) before closing yesterday below $4 per MMBtu. |
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The Henry Hub price echoed the week’s general cash market price increase by rising 3.2 percent from $3.97 per MMBtu the previous Wednesday to $4.10 per MMBtu yesterday on forecasts of returning cooling load to some areas. As the accompanying table shows, the Henry Hub cash price meandered in a narrow range most of the week before surging 13 cents the last two days following the earthquake and prospects for returning near-term cooling load. |
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Working natural gas in storage rose to 2,906 Bcf as of Friday, August 19, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 73 Bcf from the previous week, stocks are now 140 Bcf below last year and 55 Bcf less than the 5-year average. This represents a very large build for this time of year and is almost twice the size of last year’s build of 38 Bcf. The injection is the second consecutive week of above-average builds. |
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FERC, NERC Release Task Force Report on February 2011 Southwest Power Curtailments. The Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) released a report on August 16 investigating the causes of rolling blackouts and natural gas shortages experienced by Southwest customers in February. According to the report, the majority of outages and shortages were weather-related, due to the extreme cold faced by much of the country during the beginning of February. The report includes recommendations for regulators, generators, and natural gas suppliers to ensure reliability during similar weather conditions in the future. According to the report, extreme cold reduced natural gas supply and caused unprecedented demand levels. The report recommended: More information is available at: http://www.ferc.gov/media/news-releases/2011/2011-3/08-16-11.asp August 23 Earthquake Causes Shutdown of Nuclear Reactors. The two nuclear reactors at Dominion Virginia Power’s North Anna Power Station shut down automatically on August 23, following the 5.8 earthquake centered about five miles from nearby Mineral, Virginia. No damage has been reported and reactor cool-down and safety inspections are ongoing. Dominion also has another nuclear reactor station in Surry, Virginia, located in the Southeast region of the Commonwealth, where shocks were felt, but not as strongly, and both units are operating. According to BENTEK Energy, the North Anna facility had been operating at 100% utilization, and replacement from gas-fired generation could total 350 million cubic feet (MMcf) per day until the units are restored. BENTEK noted that the units will likely be in service by the end of the weekend. USGS Releases New Marcellus Shale Assessment. The Marcellus Shale, located in the Northeast U.S., contains about 84 trillion cubic feet (Tcf) of undiscovered, technically recoverable natural gas resources, according to a new United States Geological Survey (USGS) report released on August 23. According to the report, the Marcellus Shale also contains 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids (NGLs). Technically recoverable oil and gas resources are defined as those which are producible using currently available technology and industry practices, regardless of economic or accessibility considerations. These resource levels represent mean estimates with reported uncertainty ranges and are an update to a previous 2002 study, which estimated only about 2 Tcf of natural gas and 0.01 billion barrels of NGLs. The increase is the result of new technologies that have led to significant production gains in the shale play over the last several years. The Marcellus Shale assessment covered areas in Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. Hurricane Irene Expected to Reduce Natural Gas Demand. Hurricane Irene, currently on a path to hit North Carolina on Saturday, is likely to reduce consumption of natural gas from South Carolina up to Massachusetts, according to a recent update from BENTEK Energy. Wind and rain will reduce demand for cooling for households, and some businesses and industrial natural gas users are also likely to close due to weather conditions. Additionally, according to BENTEK, widespread power outages are expected. With a relatively wide diameter of 460 miles, Irene could bring widespread rain to areas far outside the center of the storm as it moves up the East Coast through the weekend. The last hurricane to make landfall was Hurricane Ike in 2008, which came on the heels of Hurricane Gustav. These two hurricanes hit the Gulf of Mexico and led to significant production shut-ins. The National Hurricane Center provides frequent updates on the status of hurricanes and tropical storms, as well as projected path information, and is available here: http://www.nhc.noaa.gov/ Natural Gas Rigs at 6-Month High. Following three consecutive weeks of increases, natural gas rigs rose from 877 at the end of July to 900 on Friday, August 19, according to data released by Baker Hughes Incorporated. This is the highest level reported since February 2011, and since then, rigs have remained in the upper 800s. The recent increase in natural gas rigs, however, is dwarfed by the rise in oil rigs over the past several months. Oil-directed rigs increased by 11 on the week to 1,066, and have risen for 18 consecutive weeks, resulting from relatively high oil prices. Additional oil rigs are likely to bring additional associated natural gas production. |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, August 17, 2011)
Posted by nuenergen on August 18, 2011
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With the exception of an almost across the board increase in prices on Friday, August 12, spot prices fell at most trading locations across the country this report week, with many ending the week below $4. The price increase on Friday was likely a response to the release of the storage report showing below-expected builds. The Henry Hub spot price averaged $3.97 per MMBtu yesterday, its lowest level since March of 2010. Northeast prices fell during the week, but in general remained above $4, with prices at Transcontinental Pipeline’s Zone 6 pricing point for delivery into New York City declining during the report week from $4.41 per MMBtu last Wednesday to $4.20 yesterday. |
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Declining temperatures this week led to a considerable drop in consumption of natural gas for power generation. Power burn fell almost 19 percent week over week, according to data from Bentek Energy Services, LLC. Supply declined slightly under 1 percent during the week as declines in LNG and Canadian imports offset ever so slight production increases. Dry production increased 0.2 percent from the previous week, while Canadian imports fell 10.4 percent and LNG imports declined by over 30 percent, with LNG imports averaging only 314 million cubic feet (MMcf) per day this week. |
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Working natural gas in storage rose to 2,833 Bcf as of Friday, August 12, according to EIA’s WNGSR (see Storage Figure). Following a net injection of 50 Bcf from the previous week, stocks are now 175 Bcf below last year and 73 Bcf less than the 5-year average. The injection marks the end of five consecutive weeks of below-average builds. Last year’s build was just 28 Bcf and the 5-year average build is 43 Bcf. |
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Other Market Trends |
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ERCOT Contracts with Power Generation Owners to Add Additional Capacity. The Electric Reliability Council of Texas announced temporary contracts through October with two power generation owners to bring back online four previously mothballed natural gas-fired generators in cases of extreme heat. Garland Power and Light and NRG Energy each own two of the generators, which total about 400 megawatts. The generators will only be brought online if necessary to prevent extreme measures such as rolling blackouts. Due to extreme heat this summer, electricity use in Texas has been exceptionally high, and increasing demand for energy has put stress on generators within the ERCOT area. ERCOT also noted that if extreme drought conditions in the State continue, it could lead to outages because of power plant cooling water issues. More information is available at: http://www.ercot.com/news/press_releases/show/424 |

NuEnergen Weekly Natural Gas Report (For the Week Ending Wednesday, August 10, 2011)
Posted by nuenergen on August 15, 2011
Spot prices fell this report week at most trading locations across the country, with the largest drops occurring on August 5. The Henry Hub spot price averaged $4 per MMBtu on Friday, August 5, its lowest level since March 21, 2011. In addition to cooler weather, a bearish storage report on Thursday, August 4, may also have put downward pressure on natural gas prices. Northeast prices fell somewhat during the week (generally between 10 and 25 cents), having backed off from extreme heat in previous weeks that led to double digit price spikes. At Transcontinental Pipeline’s Zone 6 pricing point for delivery into New York City, prices dropped during the report week from $4.62 per MMBtu last Wednesday to $4.41 yesterday.
The decline in temperatures this week led to decreases in consumption of natural gas for power generation. Power burn fell almost 4 percent week over week, according to data from Bentek Energy Services, LLC. Supply also fell slightly during the week, as robust production was offset by declines in Canadian imports. Dry production increased 0.6 percent from the previous week, while Canadian imports fell 8.1 percent. Though increasing about 1 percent from the previous week, LNG imports averaged only about 450 million cubic feet (MMcf) per day this week. Increases in domestic supply have reduced the need for imports, while higher prices globally have diverted LNG cargoes away from the United States.
At the New York Mercantile Exchange, the price of the near-month contract (September 2011) fell by $0.087 per MMBtu to settle at $4.003 per MMBtu yesterday. Wednesday’s settlement price was a slight rebound from earlier in the report week; the previous four trading days the price was below $4 per MMBtu. The price of the 12-month strip (the average of the 12 contracts between September 2011 and August 2012) fell less than 1 percent on the week, from $4.409 per MMBtu last Wednesday to $4.371 per MMBtu yesterday.
Working natural gas in storage was 2,783 Bcf as of Friday, August 4, according to EIA’s WNGSR(see Storage Figure) . This represents an implied net injection of 25 Bcf from the previous week. This week’s build is 12 Bcf below the five-year average of 37 bcf; this marks the fifth consecutive week of below-average builds. During the comparable week last year, inventories increased 36 Bcf. The relatively low inventory build this week was likely due to increased demand for natural gas for power generation during an exceptionally hot week.
The Producing Region registered a net withdrawal for the fourth consecutive week. The Producing Region’s five-year average change for this week is a withdrawal of 5 Bcf; this week’s 21 Bcf draw was far above the average. Areas in the Producing Region, specifically Texas, experienced record high temperatures in July, and power burn was above normal in July and into the beginning of August.
Temperatures during the week ending Thursday, August 4, averaged 79.3 degrees, about 4 degrees warmer than normal. The hottest area of the country during the week was the West South Central, which includes Texas, Louisiana, Arkansas, and Oklahoma. Temperatures averaged 88.9 degrees, 5.9 degrees greater than the 30 year normal(see Temperature Maps and Data). Temperatures were above average in all Census divisions, and above last year’s temperatures in all but the East South Central.
NOAA Declares Last Month Was Officially Hot. With a nationwide average temperature of 77 degrees, last month was the fourth hottest July on record, the National Atmospheric and Oceanic Administration (NOAA) said on August 8. The long-term (1901-2000) average temperature for July is 74.3. Oklahoma and Texas, according to NOAA, had their hottest months on record, with temperatures averaging 88.9 and 87.1 degrees, respectively. According to NOAA, 41 of the lower 48 States experienced warmer than normal temperatures; States spared from the heat were all west of the Rockies. The extreme heat led to greater than normal consumption of natural gas for electric power generation. In fact, consumption of natural gas for power generation averaged 6.03 Bcf per day in Texas, the second highest monthly level of power burn in the years for which Bentek has data (2005-2011). Power burn in the lower 48 States averaged 28.57 Bcf per day, also close to record levels and well above the five-year (2006-2010) July average of 25.99 Bcf per day, according to Bentek data. The heat in July also led the Short-Term Energy Outlook to increase its forecast for consumption of natural gas for electric power generation in 2011.
EIA Projects Strong Supply Growth in 2011. EIA released its Short-Term Energy Outlook this week, which projects marketed production of 65.5 Bcf per day in 2011, a 5.9 percent increase over 2010. Production continues to grow in 2012, but at a slower pace, average 66.1Bcf per day. Growth occurs mainly in onshore areas, offsetting projected declines in the Gulf of Mexico. The growth in production reduces the need for imports; the STEO projects pipeline imports will fall 4.3 percent to 8.7 Bcf per day during 2011 and by another 3.7 percent to 8.4 Bcf per day in 2012. LNG imports are projected to decline to just 1.0 Bcf per day in 2011 and 2012, as higher global prices attract LNG away from the United States. Pipeline exports, on the other hand, are expected to average 4.3 Bcf per day in 2011 and 2012, compared with 3.1 Bcf per day in 2010.



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