Factor - Supply
Commentary
We continue to see sequential onshore production growth.
Total production is up 3.6 percent year-over-year. The gas rig
count continues to grow and is expected to exceed 1,000 rigs by
mid- to late summer. While liquefied natural gas (LNG)
contributes to overall supply in the United States, due to
favorable pricing in Europe, the amount of LNG coming to the
United States is significantly lower than the capacity
available.
Factor - Demand
Commentary
Industrial demand continues to increase in the United States;
however, indicators suggest the rate of growth is decelerating
from earlier this year. In July, the rate of expansion in the
manufacturing sector slowed for the third consecutive month to
an index level of 55.5. The summer heat has bolstered demand as
gas-fired electric generation is used to satisfy peaking loads. Current
estimates put July and August as the second and sixth highest
electric generation natural gas demand months on record,
respectively.
Factor - Weather
Commentary
July population-weighted cooling degree days (CDDs) were 20
percent above the 30-year normal and 30 percent above last year.
Weather Services International (WSI) maintains its forecast for
15 percent more CDDs than normal for August – October. The
consensus among weather forecasters remains for a much more
active hurricane season than in 2009, as well as the historical
average. Peak hurricane season begins in mid-August.
Factor - Storage
Commentary
Gas storage injections reported the last three months have
been at or below prior-year levels, bringing the overall
inventory level below last year’s level at this time. The
deficit to last year is expected to grow and the surplus to the
five-year average to shrink. Considering expectations for an
above-average hurricane season and the additional headroom
provided by new storage capacity, a repeat of last year’s
storage glut seems increasingly less likely.
Factor - Economy
Commentary
More mixed news is perpetuating uncertainty about the
economy. Recent reports on consumer spending, home sales,
factory orders, and consumer confidence act as reminders that
the economic recovery is not to be taken for granted. On the
other hand, the economy does show some signs of growth and
improvement.
Factor - Summary
Commentary
Despite production increases, the economic rebound, albeit
slow, seems to be contributing to greater demand for fossil
fuels. The largest price support so far this summer appears to
have come in the form of weather and the demand for gas-fired
electric generation. This has kept storage levels in check and
the weather forecast doesn’t appear to be changing any time
soon.
Factor - Supply
Commentary
We continue to see sequential onshore
production growth. Total production is up 3.6 percent year-over-year. The gas rig count continues to grow and is expected to
exceed 1,000 rigs by mid- to late summer. While liquefied natural
gas (LNG) contributes to overall supply in the United States,
due to favorable pricing in Europe, the amount of LNG coming to
the United States is significantly lower than the capacity
available.
Factor - Demand
Commentary
Industrial demand continues to increase in the United States;
however, indicators suggest the rate of growth is decelerating
from earlier this year. In July, the rate of expansion in the
manufacturing sector slowed for the third consecutive month to
an index level of 55.5. The summer heat has bolstered demand as
gas-fired electric generation is used to satisfy peaking loads. Current
estimates put July and August as the second and sixth highest
electric generation natural gas demand months on record,
respectively.
Factor - Weather
Commentary
July population-weighted cooling degree days (CDDs) were 20
percent above the 30-year normal and 30 percent above last year.
Weather Services International (WSI) maintains its forecast for
15 percent more CDDs than normal for August – October. The
consensus among weather forecasters remains for a much more
active hurricane season than in 2009, as well as the historical
average. Peak hurricane season begins in mid-August.
Factor - Storage
Outlook
Effect on price
Commentary
Gas storage injections reported the last three months have
been at or below prior-year levels, bringing the overall
inventory level below last year’s level at this time. The
deficit to last year is expected to grow and the surplus to the
five-year average to shrink. Considering expectations for an
above-average hurricane season and the additional headroom
provided by new storage capacity, a repeat of last year’s
storage glut seems increasingly less likely.
Factor - Economy
Commentary
More mixed news is perpetuating uncertainty about the
economy. Recent reports on consumer spending, home sales,
factory orders, and consumer confidence act as reminders that
the economic recovery is not to be taken for granted. On the
other hand, the economy does show some signs of growth and
improvement.
Factor - Summary
Commentary
Despite production increases, the economic rebound, albeit
slow, seems to be contributing to greater demand for fossil
fuels. The largest price support so far this summer appears to
have come in the form of weather and the demand for gas-fired
electric generation. This has kept storage levels in check and
the weather forecast doesn’t appear to be changing any time
soon.
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