US natural gas stocks 4% from capacity - EIA

15 October 2009 16:36  [Source: ICIS news]

HOUSTON (ICIS news)--The Energy Information Administration (EIA) said in a report on Thursday that natural gas storage rose by 58bn cubic feet (bcf) last week, putting total domestic storage within 4% of capacity.

The data showed underground inventories rose to 3,716 bcf in the week ended 9 October from 3,658 bcf the previous week. The most recent storage figure is only 173 bcf away from the EIA's projected total storage capacity of 3,889 bcf.

Last week's natural gas storage total was 13.8% above the 2008 inventory level at the same time. US natural gas stocks are also 14.6% higher than the five-year average during the same week.

The 58 bcf build was higher than the average analyst projection of 53 bcf.

Front-month futures on the NYMEX were 10 cents above Wednesday's close in early trading, but November contracts turned negative following the EIA release, down 3.4 cents at $4.402/MMBtu.

Within 30 minutes, November contracts were back into positive territory trading around $4.500/MMBtu.

Futures have been falling since a $4.987/MMBtu close on 5 October, the highest since January.

The flirtations with $5/MMBtu in early October might have been a high point leading into the US winter season, according to Stephen Schork, editor of the commodities newsletter The Schork Report.

"We tend to see the highest price for consumption commodities, especially natural gas and gasoline, in the run-up to the season," he said. "This is because of all of the fear and uncertainty regarding the market’s ability to offset looming, unknown demand, has to get priced into the front end of the curve."

December natural gas contracts were trading at $5.325/MMBtu and January prices were at $5.638/MMBtu shortly after the EIA report.

"The market has rallied, but the contango increased," Schork said. "That is not the sign of a market that is concerned regarding the future availability of supply to meet seasonal gas-furnace demand."

Natural gas prices are critical indicators of chemical commodity prices with its wide use as a feedstock and power supply.

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By: Ryan Hickman
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