Weekday demand lifts US Henry Hub gas from 31-mo low

Mon Apr 16, 2012 3:11pm EDT

Related Topics

* Benchmark Henry Hub up from lowest mark since Sept. 2009
    * Prices rise across the nation first time in seven sessions
    * Gas futures also higher, up from Friday's 10-year low
    * Coming Up: API oil data Tuesday, EIA oil data Wednesday

    By Eileen Houlihan	
    NEW YORK, April 16 (Reuters) - Most U.S. spot natural gas
prices rose for the first time in seven sessions on Monday, with
benchmark Henry Hub gas rising from its lowest price in more
than two years amid the return of weekday demand and arrival of
hot weather in the Northeast.	
    Mild spring weather had curbed any late-season heating or
early-season cooling demand for the past several weeks, pushing 
both cash gas and futures prices to new lows.	
    In addition, one of the mildest winters on record left
inventories bulging ahead of the injection season.	
    But a brief bout of heat in the Northeast spurred some air
conditioning demand across the region, though most traders
expect the gains to be short-lived, with milder weather on tap
for the coming days.	
    Gas for delivery at the nation's benchmark supply point
Henry Hub NG-W-HH in Louisiana rose 1 cent on average to $1.88
per million British thermal units. Hub cash gas averaged $1.87
on Friday, matching its lowest price since September 2009,
Reuters data showed.	
    Late deals were done at about a 9-cent discount to the
front-month May natural gas contract on the New York Mercantile
Exchange, little changed from deals done late Friday at
an 8-cent discount.	
    But Hub cash prices are still down over $3, or 62 percent,
from their 2011 high of $4.92, reached during a June heat wave.	
    Hub cash prices have also not been over $4 since
mid-September and have failed to break above $3 this year.	
    Monday's daily Hub average remained below the April monthly
index of $2.19 and well below the year-ago price of $4.21.	
    On NYMEX, the front-month contract rose 3.5 cents to finish
at $2.016, after sliding Friday to a 10-year spot-chart low of
$1.959. Monday was the first day in six sessions the front month
failed to make a new low.	
    In major consuming markets, gas for Tuesday delivery on the
Transco pipeline at the New York citygate NG-NYCZ6 rose 6
cents on average to $2.09, while Chicago gas NG-CHGC was 9
cents higher on the day at $2.01.	
    After highs in the 80s Fahrenheit on Monday, temperatures in
New York were seen mostly in the high 60s to low 70s over the
next several days, while Chicago highs were seen mostly in the
60s F, according to the Weather Channel's weather.com.	
    The National Weather Service's six- to 10-day outlook issued
on Sunday called for above-normal readings for about the western
two-thirds of the nation and below-normal readings across the
eastern third.	
    	
    RECORD INVENTORIES  	
    U.S. Energy Information Administration data last week showed
total gas inventories rose by just 8 billion cubic feet to 2.487
trillion cubic feet. 	
    But storage remains at record highs for this time of year,
standing nearly 56 percent above last year and about 59 percent
above the five-year average level.	
    (Storage graphic: link.reuters.com/mup44s )   	
    Early injection estimates for this week's EIA report range
from 19 bcf to 41 bcf versus last year's adjusted build of 42
bcf and the five-year average increase for that week of 26 bcf.	
    If weekly stock builds through October match the five-year
average pace, inventories would top out at 4.595 tcf, or about
12 percent above peak estimated capacity of about 4.1 tcf.	
    That could tank prices later in the injection season if
storage caverns fill up and force more gas into a well-supplied
market.    	
        	
    PRODUCTION ALSO STILL AT RECORD HIGHS	
    The EIA's short-term energy outlook last week also offered
little hope for bulls, with the agency sharply raising its
estimate for marketed gas production this year for a third
straight month. 	
    EIA said it expects 2012 gas output to climb by 3 bcf per
day, or 4.5 percent, to a record 69.22 bcfd, up from its March
outlook that had output this year at 67.91 bcf daily.	
    EIA also forecast a significant 2.8 bcf per day, or 4.3
percent, gain in consumption this year, primarily due to more
utilities switching from pricier coal to cheaper gas. But that
increase was not expected to be enough to tighten an over
supplied gas market.
    Production growth is expected to slow this year as low
prices hit plans for new drilling, but the sharp decline in the
Baker Hughes gas rig count -- down a third since peaking at 936
in October -- has not yet reduced output partly due to increased
drilling efficiency.    	
    The gas-directed rig count has fallen in 13 of the last 14
weeks, sinking on Friday to its lowest in 10 years, but rising
output from shale has kept production on an upward track.	
    (Rig graphic: r.reuters.com/dyb62s )	
                   	
    MORE FUNDAMENTALS	
    Spring nuclear power plant outages were running at about
27,500 megawatts, or 28 percent, on Monday, up from about 26,200
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)  	
                                     04/16/12        04/13/12 	
  Henry Hub                            1.88            1.87 	
  New York citygate                    2.09            2.03 	
  Chicago citygate                     2.01            1.92 	
  Panhandle (Mid-continent)            1.80            1.73 	
  Northern at Demarcation  (Minn.)     1.90            1.81 	
  Southern California border           2.28            2.21 	
  Katy Hub (East Texas)                1.86            1.83 	
  Waha (West Texas)                    1.83            1.81 	
  Dominion-South (Appalachia region)   1.96            1.93 	
  Columbia TCO (Appalachia region)     1.96            1.91 	
     	
    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 Bob Burgdorfer)
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