As the US switched off an increasing number of air conditioning systems and power burn fell nearly 19% over the week, natural gas consumption fell further. As a result, the nation’s benchmark price – the Henry Hub spot price fell US$0.12 WoW US$3.97/mBtu on 17 August and below the psychological barrier of US$4 for the first time since March 2010. Prices at several points across the country also averaged below US$4, according to the US Energy Information Administration (EIA) in its latest Natural Gas Weekly Update.
Meanwhile, the price of the September 2011 contract at NYMEX dropped by US$0.70/mBtu, or 1.7%, to US$3.933. The 12-month strip (September 2011-August 2012) slipped by about 2% to US$4.303/mBtu.
On the supply side, Baker Hughes reported the rig count higher by 13 at 896, on Friday, 12 August while storage levels on the same day were at 2833bnft3, implying a weekly net injection of 50bnft3, helping to set the scene for the decrease in gas prices. However, stocks remain lower than last years at 175bnft3 noted at this time in 2010 and 73bnft3 below the five-year average.
The slight production increases were offset by declines in LNG and Canadian imports of 30% and 10.4%, respectively. The US imported around 314mft3d of LNG.
The EIA also noted Angola’s imminent start to exporting its natural gas rather than flaring it. Chevron and Sonangol are in the process of building the country’s first LNG export terminal, which is expected to process 1.1bnft3 of associated gas per day and enter operations by 2012.
Meanwhile, due to the higher US inventories, Canadian prices slipped with Alberta gas for September delivery edging downward by 75 Canadian cents to CAD3.37/GJ (US$3.22/mBtu) on 17 August. Volume on TransCanada’s Alberta system, which gathers the production of most Canadian gas wells, was 15.4bnft3.
