Tag Archives: market indicators

The current market summary for natural gas is fairly straight forward and reflects the events of the past year. Domestic production is growing and even though U.S. consumption of natural gas is up slightly (about 2.5 percent) due primarily to gas to power generation and seasonal heating loads in early 2011, prices are down.

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A cold week in early November especially for the South, Northeast and West has put the country on notice for the coming winter heating season. With that said, the general mood is very positive for reliability and pricing this winter heating season: natural gas dry production is at record levels, even though more drilling resources are being directed toward oil; storage levels entering the winter heating season will likely peak at more than 3.8 Tcf in 2011 – settling at or above record levels; and yes, while pipeline imports and LNG sendout are down year-over-year, sufficient available capacity remains to meet a weather-driven spike in demand (constraints on transportation infrastructure notwithstanding).

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Natural gas consumers in the United States have been told to expect relatively stable natural gas costs (dependent on weather of course) and reliable supplies for the coming winter heating season. The proof is in the numbers: large underground storage volumes, record domestic production, and adequate access to pipeline and LNG imports when necessary.

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Natural gas spot and futures market prices have turned toward the downside the past two weeks, driven in part by mild weather that has led to soft demand, a fact reflected in demand volumes in the low 50 Bcf per day range, currently only slightly above last year’s volumes. Meanwhile, production remains elevated and consistently strong, so near-record volumes of gas directed into storage are now above the five-year average and close to the all time record set last year.

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