Futures news, gas. EIA predicts US consumption of natural gas to rise by 2.1 bln. cub. feet in 2012, amounting to 68.9 billion cubic feet on average. Due to mild winter this year, EIA expects residential and commercial consumption to drop by 0.5 percent and 0.1 percent, accordingly, in 2012.
Predicted natural gas use in the sphere of electric energy is supposed to amount to 9% in 2012. The reason for such growth is economic advantage of natural gas over coal. Consumption in the sphere of electric energy will reach maximum during the third quarter of 2012, when demand for electric energy is the highest.
Natural gas use will keep rising in 2013 and will amount to the average of 69.3 billion cubic feet. Residential and commercial consumption will rise in 2013, as next winter temperature is expected to be around the norm.
Total production has risen by about 4.8 bln. cub. feet during 2011, which is the highest point ever. Higher production of shale gas became the reason of such considerable rise. While EIA experts are waiting for the further rise of production during 2012 and 2013, the rise will be considerably smaller than during 2011, as lower prices for natural gas have cut the companies’ plans on well dwelling. According to information from BakerHughes, as of March 02, 2012 the number of wells amounted to 691, in comparison to 936 wells in mid-October 2011. Shortage of the number of operating wells has resulted into smaller gas recovery, which is partially connected with the higher level of wells’ capacity.
Pipeline gas import is expected to drop by 0.6 bln. cub. feet in 2012 due to rising domestic production, which will keep substituting gas from Canada. Mild winter also contributes to import shortage. Gross pipeline export has risen by 1.0 bln. cub. feet during 2011 mostly due to export to Mexico. Export will keep rising in 2012 and 2013, at a lower pace though.
Import of liquefied gas will drop by 0.3 bln. cub. feet (28%) in 2012. EIA expects for about 0.7 bln. cub. feet of gas to enter US terminals in 2012 and 2013 as a result of fulfillment of obligations and due to high seasonal prices at domestic market, delivery failures, and cold weather.
Stocks of natural gas keep reaching new record levels, as very mild winter has resulted into extremely low consumption of stocks. According to "Weekly Stocks Report" of EIA dated February 24, 2012, stocks have amounted to 2.513Bcf, which is 756Bcf more than last year. EIA expects the heating season to end with record stocks of about 2270 Bcf. EIA also expects the stocks to set new records at the end of October 2012 and in 2013.
Natural gas spot prices amounted to the average of 2.50$ MMBtu in February 2012, which is 0.17 $ MMBtu less than January price. This price is the lowest monthly price since 2002. High level of stocks and high supply have resulted in such low prices. EIA expects for spot prices at Henry Hub terminal to rise and amount to the average of 3.17 $ MMBtu in 2012 and 3.96 MMBtu in 2013, which is 0.18 $ MMBtu and 0.07 $ MMBtu less than predicted last month.
Future prices of natural gas with deliveries in May 2012 have amounted to 2.69 $ MMBtu, at average volatility of 42%. During the equal period in 2011 prices have amounted to 3.98 $ MMBtu at the volatility of 33%.
According to Commodity Trading Department of , mid-term trend remains bearish, as the price is negatively influenced by record stocks that resulted from warm winter and record low production of 4.8 bln. cub. feet in 2011.
