U.S. spot natgas rises on weekday demand, nuclear outages
U.S. spot natural gas prices rose across the nation on Monday, lifted by the return of weekday industrial demand and a large number of nuclear power plant outages.
But milder weather that pressured gas futures prices was also seen limiting more gains on the cash side, traders said.
Gas for Tuesday delivery at benchmark supply point Henry Hub in Louisiana rose 6 cents on average to $2.82 per million British thermal units, after staying flat on Friday for gas delivered through Monday.
Hub cash gas rose to $3.01 just over a week ago, its highest mark – and first time above $3 – since August 2, according to Reuters data. Late deals firmed to just 1 cent under the front month October gas futures contract on the New York Mercantile Exchange, from deals done late Friday at a 10-cent discount.
The daily Hub average remained above the September monthly index of $2.63, but well below the year-ago price of $3.74. Hub cash prices peaked last year on June 9 at $4.92.
On NYMEX, the front-month contract traded late down about 5 cents at $2.837, adding to last week’s 2-percent slide.
In late July, the nearby contract rose to $3.277, its highest mark since December.
In major consumer markets, gas on the Transco pipeline at the New York citygate rose 9 cents on average to $2.93, while Chicago gas was 4 cents higher on the day at $2.96.
On the nuclear front, outages on Monday totaled 16,800 megawatts, or 17 percent of U.S. capacity, down from 17,700 MW out on Friday, but up from 10,800 MW out a year ago and a five-year outage rate of about 12,400 MW.
The National Weather Service’s latest six- to 10-day outlook issued on Sunday called for normal or above-normal readings for most of the nation, with some below-normal temperatures only in the Southeast.
STOCKS HIGH DESPITE LIGHTER-THAN-NORMAL BUILDS
The U.S. Energy Information Administration last week said domestic gas inventories rose the prior week by 67 billion cubic feet to 3.496 trillion cubic feet.
Most traders viewed the build as neutral, noting it was above Reuters poll estimates for a 64-bcf gain, but below last year’s rise of 89 bcf and the five-year average increase for that week of 73 bcf.
Storage now stands 320 bcf, or 10 percent, above the same week in 2011 and 278 bcf, or 9 percent, above the five-year average.
(Storage graphic: link.reuters.com/mup44s)
Record heat this summer has kept weekly storage builds below the seasonal norm in 20 of the last 21 weeks and helped trim a huge storage surplus compared to last year from its late-March peak near 900 bcf.
But stocks are still at record highs for this time of year and hovering at a level not normally reached until the second week of October. The surplus offers a huge cushion that can help offset any spikes in demand or Gulf Coast supply disruptions from storms.
Traders said autumn injections are poised to pick up as weather loads fade, with early injection estimates for this week’s report ranging from 69 bcf to 83 bcf versus a year-earlier build of 104 bcf and the five-year average increase for the week of 76 bcf.
Concerns remain that the inventory overhang will pressure prices this autumn if storage caverns fill to near capacity and back more natural gas into a well-supplied market.
RIGS RISE IN LATEST WEEK, PRODUCTION STILL HIGH
Drilling for natural gas has been in a nearly steady decline for the last 11 months, but the gas-directed rig count rose last week by six to 454, after falling to a 13-year low of 448 the previous week, according to data from Baker Hughes on Friday.
While pure gas drilling has become largely uneconomical at current prices, gas produced from more-profitable shale oil and shale gas liquids wells has kept output stubbornly high.
(Rig graphic: r.reuters.com/dyb62s)
Average prices at other spot gas market points and previous day prices follow (US$/mmBtu):
09/24/12 09/21/12
Henry Hub 2.82 2.76
New York citygate 2.93 2.84
Chicago citygate 2.96 2.92
Panhandle (mid-Continent) 2.70 2.63
Northern at Demarcation (Minn.) 2.89 2.86
Southern California border 3.13 2.98
Katy Hub (east Texas) 2.80 2.77
Waha (west Texas) 2.81 2.73
Dominion-South (Appalachia region) 2.81 2.74
Columbia TCO (Appalachia region) 2.85 2.78
For more U.S. Spot Natural Gas prices click on
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(Editing by Phil Berlowitz)https://in.reuters.com/article/2012/09/24/us-markets-natgas-spot-idINBRE88N0VV20120924
-Eileen Houlihan
