Tuesday, 27 November 2012 02:45
NEW YORK: US spot natural gas prices rose across the nation on Monday, with gas at the nation's benchmark delivery point Henry Hub at its highest level in 14 months.
Traders said prices were lifted by the return of industrial demand following the US Thanksgiving holiday weekend.
Some cold, wintry weather on tap for Tuesday for the Northeast and a large number of nuclear power plants still off line for maintenance added additional support.
Cash prices also traded at a premium to gas futures for the first time since early September as the near-term cold was seen boosting heating demand for the fuel.
But weaker gas futures on Monday, pressured by milder long-term weather outlooks, were expected to limit more upside.
Gas at the nation's benchmark supply point Henry Hub in Louisiana rose 16 cents on average to $3.75 per million British thermal units, its highest mark since late September 2011, according to Reuters data.
Hub cash gas slid 3 cents on Wednesday for gas delivered through Monday. Cash gas did not trade on Thursday or Friday last week due to the Thanksgiving holiday.
Monday's average price was still above the November monthly index of $3.47 and the year-ago price of $2.84.
Late deals firmed to 5 cents over the front-month December gas futures contract on the New York Mercantile Exchange, from deals done early Wednesday at a 20-cent discount.
On NYMEX, the front-month contract traded late down about 18 cents, or more than 4 percent, at $3.72, after climbing Friday to $3.933, its highest price since November 2011.
In major consuming markets, gas on the Transco pipeline at the New York citygate rose nearly $1 on average to $4.95, its highest price since last winter.
Other Northeast prices traded in the $12 area, with gas on the Algonquin system in New England remaining the priciest in the nation as heavy demand led to some pipeline restrictions in the region.
Chicago gas was 38 cents higher on the day at $4.06.
While some cold is expected across the Northeast and Midwest over the next few days, both private forecaster MDA EarthSat and the National Weather Service in their six-to-10-day outlooks called for above-normal readings for the entire country.
Nuclear outages totaled about 22,600 megawatts, or 22 percent of US capacity, up from 11,000 MW out a year ago and a five-year outage rate of about 13,300 MW.
SEASON'S SECOND DRAW
Data from the US Energy Information Administration last week showed domestic inventories fell the prior week by 38 billion cubic feet to 3.873 trillion cubic feet. Inventories hit a record high 3.929 tcf three weeks ago.
The weekly data included a "reclassification" of 7 bcf of working gas to base gas, reducing estimates of working gas stocks in the Producing Region, nonsalt facilities for the week ended Nov. 16. The reclassification had the effect of increasing the implied net withdrawal to 38 bcf from 31 bcf for the total Lower 48, EIA said.
Stocks are about even with last year's levels, but are nearly 5 percent above the five-year average level.
Early estimates for this week's EIA report range from a build of 5 bcf to a draw of 28 bcf versus a year-ago gain of 2 bcf and a five-year average withdrawal of 18 bcf.
Drilling for natural gas has mostly been in decline for the last year, with gas rigs down 54 percent since peaking last year at 936 in October 2011. The steep slide has fed expectations that producers might curb record output, but so far production has not shown any significant signs of slowing.
The associated gas produced from more-profitable shale oil and shale gas liquids wells has kept dry gas flowing this year at or near a record pace.
Copyright Reuters, 2012