Factor - Natural Gas Supply
Commentary
Production growth in 2012 has slowed from previous years. Dry production in May was unchanged from April since gains in the Marcellus Shale, Oklahoma and Colorado areas were offset by declines in the Gulf of Mexico and Wyoming. Meanwhile, the rig count has continued to plummet. Since last year, the number of rigs has declined by 43 percent to the current count of 498 active rigs, according to the most recent Baker Hughes data.
Factor - Demand
Commentary
Bentek Energy, a leading market analytics company, recorded daily power burn demand level at 37.6 Bcf/d in late July. Power burn during the summer has been at historically high levels, due to much warmer-than-normal weather and low natural gas prices. Gas demand from utilities is up 24 percent when compared to last year due to utilities substituting cheaper natural gas in lieu of coal; however, analysts say that natural gas will become less appealing to utilities as the price rises above $3. As average temperatures decline in September, demand will decrease as well.
Factor - Weather
Commentary
Weather Services International has revised its August forecast to show warmer temperatures, raising its cooling degree day (CDD) forecast to just 2 percent below last year. A report from the National Oceanic and Atmosphere Administration notes that the United States is experiencing its "warmest 12-month period since record keeping began in 1895." Colorado State University's hurricane forecast team released its 2012 Atlantic hurricane forecast, predicting 14 named storms, with six becoming hurricanes and two of those becoming major storms of Category 3 level or higher.
Factor - Storage
Commentary
Natural gas inventory in storage at 3.217 trillion cubic feet, a record high for this time of year. Last year, that level did not transpire until late September. While storage congestion seemed imminent at the start of the summer, hot weather and low prices have helped work off the storage overhang. Going forward, inventories will likely end the season close to last year's levels.
Factor - Economy
Commentary
Non-farm payrolls for July reveal that 163,000 jobs were added, surpassing original expectations of 100,000 jobs. This new data shows that the economy may be recovering from a second-quarter slowdown; however, the unemployment rate remained nearly the same, increasing from 8.2 to 8.3 percent. This slight rise indicates that layoffs still occurred despite job gains. The Federal Reserve has yet to announce if any monetary stimulus will be offered to boost the economy.
Factor - Summary
Commentary
Slowing production growth and the warmer-than-normal weather have helped keep storage levels in check. Weather played a major part for natural gas balances this summer; however, as the fall season nears and temperatures become milder, demand will taper until cooler winter temperatures arrive.
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Factor - Natural Gas Supply
Commentary
Production growth in 2012 has slowed from previous years. Dry production in May was unchanged from April since gains in the Marcellus Shale, Oklahoma and Colorado areas were offset by declines in the Gulf of Mexico and Wyoming. Meanwhile, the rig count has continued to plummet. Since last year, the number of rigs has declined by 43 percent to the current count of 498 active rigs, according to the most recent Baker Hughes data.
Factor - Demand
Commentary
Bentek Energy, a leading market analytics company, recorded daily power burn demand level at 37.6 Bcf/d in late July. Power burn during the summer has been at historically high levels, due to much warmer-than-normal weather and low natural gas prices. Gas demand from utilities is up 24 percent when compared to last year due to utilities substituting cheaper natural gas in lieu of coal; however, analysts say that natural gas will become less appealing to utilities as the price rises above $3. As average temperatures decline in September, demand will decrease as well.
Factor - Weather
Commentary
Weather Services International has revised its August forecast to show warmer temperatures, raising its cooling degree day (CDD) forecast to just 2 percent below last year. A report from the National Oceanic and Atmosphere Administration notes that the United States is experiencing its "warmest 12-month period since record keeping began in 1895." Colorado State University's hurricane forecast team released its 2012 Atlantic hurricane forecast, predicting 14 named storms, with six becoming hurricanes and two of those becoming major storms of Category 3 level or higher.
Factor - Storage
Commentary
Natural gas inventory in storage at 3.217 trillion cubic feet, a record high for this time of year. Last year, that level did not transpire until late September. While storage congestion seemed imminent at the start of the summer, hot weather and low prices have helped work off the storage overhang. Going forward, inventories will likely end the season close to last year's levels.
Factor - Economy
Commentary
Non-farm payrolls for July reveal that 163,000 jobs were added, surpassing original expectations of 100,000 jobs. This new data shows that the economy may be recovering from a second-quarter slowdown; however, the unemployment rate remained nearly the same, increasing from 8.2 to 8.3 percent. This slight rise indicates that layoffs still occurred despite job gains. The Federal Reserve has yet to announce if any monetary stimulus will be offered to boost the economy.
Factor - Summary
Commentary
Slowing production growth and the warmer-than-normal weather have helped keep storage levels in check. Weather played a major part for natural gas balances this summer; however, as the fall season nears and temperatures become milder, demand will taper until cooler winter temperatures arrive.
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