Winter weather extends deep draws in US natural gas storage

18 February 2011 00:04  [Source: ICIS news]

HOUSTON (ICIS)--The cold weather that swept across the US last week lead to natural-gas deliveries totalling 233 billion cubic feet (bcf), a figure well above the seasonal average, the US Energy Information Administration (EIA) said on Thursday.

The reduction from 2,144bcf of total storage to 1,911bcf in the week ended 11 February marked the second stout delivery week and put current stocks more than 6% below the five-year average and 2010's year-on-year levels.

The cold weather not only contributed to stronger burn for electricity use, according to the Edison Electric Institute, but also halted some US production, contributing to the large net decrease.

“For the reference week, US gas demand averaged 99.3 bcf/day in response to the elevated heating demand, while the US dry gas production average was down 2.5% week over week, or minus 1.4 bcf/day, to 56.7 bcf/day in response to freeze-offs in key producing regions,” analysts at Credit Suisse said in a client report previewing the EIA report.

Last week’s drop in stocks was deeper than last year’s 190bcf delivery or the five-year average of 150bcf. But the draw did not live up to market expectations of reductions of more than 240bcf.

Futures prices responded with a 1.4% fall from the previous session after losing 5.3 cents and settling at $3.868/MMBtu, a three-month low for the prompt contract.

The price of natural gas is an important bellwether for chemical commodity prices because of the fuel’s use as a feedstock and power source.

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