Western Price Survey
December 20, 2013
Natural gas withdrawals reached record levels during recent chilly weather across the United States.
Working gas in storage reached 3,248 Bcf as of Friday, Dec. 13, according to U.S. Energy Information Administration estimates, a net decrease of 285 Bcf from the previous week.
The previous record withdrawal was 274 Bcf in January 2008, while the previous largest December withdrawal was 208 Bcf, recorded in 2000. The agency stated that December withdrawals since 2008 have been 109 Bcf/week on average.
Storage levels are now 13.1 percent less than a year ago and 7.4 percent less than the five-year average. The Western region saw a 54 Bcf withdrawal during the agency's report period, which was also a record. It bettered the previous high of 43 Bcf, recorded in January 2007. The previous December record withdrawal was 39 Bcf in 2009, noted the agency.
The news, according to the EIA, immediately increased NYMEX natural gas futures by 7 cents/MMBtu. "In the hour following the release, prices climbed an additional 6 cents/MMBtu" to roughly $4.44/MMBtu.
"The current storage levels are at a 3-year low for this time of year," according to Enerfax. "Some traders are setting their sights on $5.00, last seen in June 2010. However, a significant warming trend could send prices sinking."
The storage report, however, was for gas withdrawn during a cold week. As the nation warmed, gas prices fell. Henry Hub spot prices lost 14 cents since last Thursday, trading Dec. 19 at $4.26/MMBtu. Western spot prices saw greater drops over the Thursday-to-Thursday period, with EP-San Juan tumbling 33 cents to $4.22/MMBtu and Sumas natural gas falling 28 cents to $4.27.
Average spot power prices also lost value in the Dec. 13 to Dec. 20 trading period, with Northwest peak-power prices falling $16 on average while Palo Verde shed about 80 cents. Prices on Dec. 20 ranged from $41/MWh at Mid-Columbia to $52.45 at North of Path 15 (see chart).
Off-peak prices also fell in Friday-to-Friday trading, with Northwest hubs losing $9 or $10. Mid-C led losers, down $10.35 to $36.85.
What's ahead: There's been little precipitation in California in December, and a late-season blaze destroyed 17 homes in Big Sur. Forecasts call for more dry weather through next week, and the National Weather Service predicts that temperatures in California should remain above normal from Dec. 25 to Jan. 2. The NWS forecasts an increased probability of below-normal temperatures for Washington and Oregon over that period [Linda Daily Paulson].
Archives of the Western Price Survey for the past year are also available online.
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