April 5, 2012 / 7:07 PM / 5 years ago

U.S. spot natgas slips ahead of holiday weekend

* Benchmark Henry Hub remains above Monday's 31-month low
    * Milder weather on tap for much of the nation
    * Gas futures also end lower after big EIA storage build
    * Coming up: NYMEX floor trading closed for Good Friday

    By Eileen Houlihan	
    NEW YORK, April 5 (Reuters) - U.S. spot natural gas prices
slid on Thursday for the fist time in three sessions, pressured
by expectations for lighter industrial demand from businesses
shuttered for the long holiday weekend.	
    New York Mercantile Exchange floor trading and electronic
trade will be closed Friday for the Good Friday holiday.	
    Traders also cited ongoing concerns over record-high
production and milder, spring weather outlooks as putting more
pressure on prices.	
    Weaker gas futures added more weight to the downside,
sliding after government storage data showed a
larger-than-expected weekly build to inventories.	
    Gas at the U.S. benchmark supply point Henry Hub NG-W-HH
in Louisiana slid 8 cents on average to $1.98 per million
British thermal units, after rising 12 cents on Wednesday for
gas delivered on Thursday.	
    Hub cash gas fell on Monday to $1.88, its lowest price since
September 2009, Reuters data showed.	
    And cash prices are still down nearly $3, or 60 percent,
from their 2011 high of $4.92 hit during a June heatwave.	
    Hub cash prices have not been over $4 since mid-September
and have failed to break above $3 this year.	
    Thursday's daily Hub average was also below the April
monthly index of $2.19 and the year-ago price of $4.22.	
    On NYMEX, the front-month contract fell 5.2 cents to finish
at $2.089, hovering just above Monday's 10-year spot chart low
of $2.069.	
    In major consuming markets, gas for delivery through Monday
on the Transco pipeline at the New York citygate NG-NYCZ6 slid
13 cents on average to $2.19, while Chicago gas NG-CHGC was 5
cents lower on the day at $2.15.	
    Low temperatures in both key gas-consuming cities were seen
mostly in the low-30s to mid-40s Fahrenheit for the next several
days, according to the Weather Channel's weather.com.	
    The National Weather Service's six- to 10-day outlook issued
on Wednesday again called for above-normal readings for much of
the mid-Continent and normal or below-normal readings along both
coasts.	
    	
    INVENTORY WORRIES  	
    EIA data on Thursday showed total gas inventories rose 42
billion cubic feet to 2.479 trillion cubic feet, above Reuters
poll estimates for a 34 bcf build and driving stocks further
into record territory for this time of year..  	
 (Storage graphic: link.reuters.com/mup44s)   	
    Early injection estimates for next week's EIA report ranged
from 11 bcf to 45 bcf versus last year's adjusted build of 7 bcf
and the five-year average increase for that week of 22 bcf.	
    Utilities typically build inventories from April through
October to help meet peak winter heating needs, but builds this
year started two weeks earlier than usual. Storage finished
March near 2.5 tcf, about 60 percent above normal and easily
above the previous record of 2.148 tcf set in 1983.	
    The inventory surplus will provide a hefty cushion to meet
any spikes in demand or storm-related disruptions in supply this
year. It is expected to grow further in coming weeks, at least
until stronger air conditioning demand slows builds.  	
        	
    PRODUCTION NOT EXPECTED TO SLOW SOON	
    Baker Hughes data showed the gas-directed rig count slid 11
to a 10-year low of 647, the 12th decline in 13 weeks.
 (Rig graphic: r.reuters.com/dyb62s)	
    The steady drop in dry gas drilling this year -- the gas
count is still down 31 percent since peaking at 936 in
mid-October -- had stirred expectations that low prices would
finally force producers to curb gas output and tighten supplies.	
    But the drop has yet to be reflected in pipeline flows,
which are still estimated to be at or near record high levels,
primarily due to rising output from shale.  	
    U.S. Energy Information Administration production data last
week offered little hope for bulls, with January gross gas
output climbing to a record of 72.85 billion cubic feet per day,
eclipsing the previous peak of 72.68 bcfd in November.  	
    The slight drop the agency reported for December, the first
measurable decline since well freeze offs curbed output in
January and February 2011, had raised expectations that
producers might finally be curtailing output.  	
    Some analysts say the gas-directed rig count may have to
drop below 600 to reduce flowing supplies significantly. Most
analysts do not expect any major slowdown in gas output until
later this year.	
     	
    MORE FUNDAMENTALS	
    Nuclear plant outages were running at about 22,000
megawatts, or 22 percent, on Thursday, down from 25,100 MW out a
year ago and a five-year outage rate of about 23,100 MW.
 	
    Traders said the outages should add more than 1 bcf to daily
gas demand.	
      	
    Average prices at other spot gas market points and previous
day prices follow (US$/mmBtu)  	
                                     04/05/12        04/04/12 	
  Henry Hub                            1.98            2.06 	
  New York citygate                    2.19            2.32 	
  Chicago citygate                     2.15            2.20 	
  Panhandle (Mid-continent)            1.93            2.01 	
  Northern at Demarcation  (Minn.)     2.05            2.12 	
  Southern California border           2.25            2.36 	
  Katy Hub (East Texas)                1.99            2.06 	
  Waha (West Texas)                    1.99            2.06 	
  Dominion-South (Appalachia region)   2.10            2.18 	
  Columbia TCO (Appalachia region)     2.07            2.13 	
     	
    For more U.S. Spot Natural Gas prices click on <0#NG-US> 	
     	
    RELATED LINKS 	
    - Canadian Spot Natural Gas Prices..............<0#NG-CA> 	
    - U.S. Spot Gas versus Oil Comparisons.......... 	
    - BTU U.S. Spot Natural Gas Prices..............<0#NG-BTU> 	
    - U.S. Nuclear Power Reactor Outage Table ...... 	
    - North American Power Plant Outage Table ..... 	
    - North American Power Transmission Table ..... 	
    - U.S. EEI Electricity Output Report ........... 	
    - U.S. EEI Electricity Output Table ............ EEI- 	
    - NYMEX Natural Gas Futures .................... <0#NG:> 	
    - NYMEX Crude Oil Futures .......................<0#CL:>	
	
 (Reporting by Eileen Houlihan; Editing by David Gregorio)

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