Strong electricity demand spurs 243 bcf natural gas draw

20 January 2011 18:28  [Source: ICIS news]

HOUSTON (ICIS)-- A hefty boost in electricity output helped soak up 243bn cubic feet from US underground storage last week, the US Energy Information Administration (EIA) reported in its weekly inventory scorecard on Thursday.

The relatively large delivery in the week of 14 January brought total stocks down to 2,716 bcf. The draw was on the high end of market expectations and spurred an increase in the futures market.

At noon New York time (17:00 GMT), the NYMEX February contract was trading at $4.629/MMBtu, an increase of 6.8 cents from the prior session’s close.

Natural gas futures prices are an important barometer for the value of chemical commodities, with the fuel’s use as feedstock as well as power production fuel.

US energy analyst Stephen Schork said that a swath of cold in the midwest and northeast last week bumped up heating degree days and electricity demand.

“Overall electricity output surged by 8.6% to 86,690 gigawatt hours,” Schork said. “That was the largest amount of electrons transmitted since last summer’s heat.”

Despite the large withdrawal, current stockpiles are nearly 3% above last year’s levels at the same time, and at a 1.9% surplus to the five-year average. The delivery during 2010’s corresponding week was 248 bcf, according to EIA data.

The year-over-year overhang continues to be driven by historically high inventory in the US Gulf coast, which has seen demand in its key market in the northeast wane as production emerges out of shale fields within that region, particularly the Marcellus play.

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By: Ryan Hickman
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