* Benchmark gas prices lowest since December 2001
* Mild spring weather forecast for much of nation
* Gas futures hovered early near 10-year spot low
* Coming Up: CFTC futures trade data Friday
(Adds details, updates throughout, adds price table)
By Eileen Houlihan
NEW YORK, April 20 (Reuters) – Benchmark U.S. spot natural
gas prices slid to their lowest level in more than 10 years
Friday, pressured by persistent mild weather and record-high
supplies that have dragged down the gas futures market for
weeks.
While natural gas futures on the New York Mercantile
Exchange have hit fresh 10-year lows in eight of the past
nine trading sessions, cash prices had held near two-year lows
despite crumbling demand and bloated inventories.
Gas for weekend delivery at the nation’s benchmark supply
point Henry Hub
in Louisiana slid to $1.82 per million
British thermal units, its lowest price since December 2001,
breaking below the two-year low of $1.83, Reuters data showed.
With high temperatures in the big consuming regions of the
country mostly in the 70s degrees Fahrenheit recently, few
traders expected any rise in prices until hotter weather arrives
to kick up air conditioning loads.
“Seasonality for natural gas, or the shoulders months
between the heating and cooling season, are typically low-demand
months,” said Chris Jarvis, president of Caprock Risk Management
in Rye, New Hampshire.
“Given the fact that we are 50 percent over the five-year
average on storage for this time of the year and will likely max
out storage come the end of the injection season, gas prices are
reflecting those weak fundamentals,” Jarvis said.
Hub cash prices are now down more than $3, or 62 percent,
from their 2011 high of $4.92 reached during a June heat wave.
They have not exceeded $4 since mid-September and have failed to
break above $3 this year. Friday’s average remained well below
the year-ago price of $4.33.
In late trading on NYMEX, the front-month contract was up 2
cents at $1.928 after sliding as low as $1.902, tying Thursday’s
nadir and at its cheapest price since January 2002.
In major consuming markets, gas for delivery through Monday
on the Transco pipeline at the New York citygate fell
4 cents on average to $1.96, below $2 for the first time since
late 2001 as well, while Chicago gas was 2 cents lower
on the day at $1.98.
RECORD INVENTORIES WEIGH ON PRICES
U.S. Energy Information Administration data on Thursday
showed total domestic gas inventories rose to 2.512 trillion
cubic feet, at record highs for this time of year, standing 53
percent above last year and about 58 percent above the five-year
average level.
(Storage graphic: http://link.reuters.com/mup44s)
Early injection estimates for next week’s EIA report ranged
from 35 bcf to 75 bcf versus last year’s adjusted build of 35
bcf and the 5-year average increase for that week of 47 bcf.
If weekly stock builds through October match the five-year
average pace, inventories would top out at 4.594 tcf, or about
11 percent above peak estimated capacity of about 4.1 tcf.
That could sink prices later in the injection season if
storage caverns fill up and force more gas into a well-supplied
market.
PRODUCTION ALSO NEAR RECORD HIGHS, NUKE OUTAGES LOWER
The EIA’s short-term energy outlook last week also offered
little hope for bulls, with the agency sharply raising its
estimate for marketed gas production this year for a third
straight month.
Production growth is expected to slow this year as low
prices hit plans for new drilling, but the sharp decline in the
Baker Hughes gas rig count — down a third since peaking at 936
in October — has not yet reduced output partly due to increased
drilling efficiency.
The gas-directed rig count rose this week for only the third
time this year, up 7 from last week’s 10-year low.
(Rig graphic: http://r.reuters.com/dyb62s)
Spring nuclear power plant outages were also well below last
year’s levels, running at about 24,100 megawatts, or 24 percent,
on Friday, down from about 29,000 MW out a year ago.
Average prices at other spot gas market points and previous
day prices follow (US$/mmBtu)
04/20/12 04/19/12
Henry Hub 1.82 1.85
New York citygate 1.96 2.00
Chicago citygate 1.98 2.00
Panhandle (Mid-continent) 1.76 1.81
Northern at Demarcation (Minn.) 1.86 1.92
Southern California border 2.15 2.24
Katy Hub (East Texas) 1.80 1.83
Waha (West Texas) 1.78 1.83
Dominion-South (Appalachia region) 1.89 1.93
Columbia TCO (Appalachia region) 1.87 1.91
For more U.S. Spot Natural Gas prices click on <0#NG-US>
RELATED LINKS
– Canadian Spot Natural Gas Prices…………..<0#NG-CA>
– U.S. Spot Gas versus Oil Comparisons……….
– U.S. Nuclear Power Reactor Outage Table ……
– North American Power Plant Outage Table …..
– NYMEX Natural Gas Futures ……………….. <0#NG:>
– NYMEX Crude Oil Futures …………………..<0#CL:>
(Reporting by Eileen Houlihan; Editing by John Picinich)
