Natural Gas Hits 2011 Highs on Inventories

by on December 20, 2013 6:13 am BST

According to the Energy Information Administration (EIA), nearly 49 percent of US households use natural gas for heating, primarily in the North- and Southeast. Stockpiles seen an all-time 285 billion cubic feet depletion in the natural gas inventories. “It smashed the all-time record,” said Stephen Schork, president of Schork Group Inc. Since the week ending on April 29, natural gas inventories fell 3.248 trillion cubic feet and increased 33 percent year-to-date. The previous record fall prior to the recent EIA report was 274 billion cubic feet.

This bullish report created a 4.9 percent increase in natural gas futures, closing a technical gap created on December 16. Bob Yawger, director of futures at Mizuho Securities USA Inc., said that when technical gaps are closed they create a “technical acceleration point.”

Inventory declines fell on a combination of factors. The United States have seen below average temperatures in December. Continued cold fronts from Canada are expected to push through the Midwest. Also, gas production fell 25 billion cubic feet since the beginning of December due to the Rockies and Midcontinent region shortfall. Daily production in the lower 48 states, natural gas production fell 2.7 percent in the week of December 12.

Natural gas future volume increased an astonishing 89 percent over the 100-day moving average, pushing prices to two-year highs. Natural gas is currently $4.444, slightly down from the high of $4.475.

1D Chart of NG

1D Chart of NG