Yesterday, the August natural gas wholesale contract went off the board at $4.37, unchanged from the previous day and settling in the $4.30 price area as has been with the rest of the summer month wholesale contracts with the exception of April 2011 which settled at $4.24. So it seems that buyers are stepping up to the plate considering the reported supply glut everyone is discussing. Last year’s summer Nymex settlement average was $4.17 as a comparison, so it seems that buyers are willingly to pay more this summer than last summer given rising production levels for natural gas. Today’s EIA storage report is forecasted in the mid 30’s to 40 bcf as shown below with Bentek at a 38 bcf injection, Bloomberg at a 39 bcf build, Reuter’s at a 40 bcf build (see below) while the energy market is trading a 34 bcf build in the over the counter market.
On the efficiency front, real-time information about the cost of electricity use can change consumers' behavior significantly, according to a study by local power grid operator CenterPoint Energy. The study of 300 Houston-area homes where residents were given devices that provided minute-by-minute power use information showed that more than 75 percent of the participants cut back their power usage once they were aware of its costs, according to the study. The in-home devices roughly the size of a cell phone and meant to sit on a kitchen counter, bedside table or other surface in plain view communicates wirelessly with smart meters that CenterPoint has rolled out to some 1.5 million Houston-area customers. The devices can tell users how much power they're consuming at any given moment in kilowatt hours or price per hour. Eighty-three percent of customers in the pilot program said the monitors made them more conscientious about turning off lights when they left a room or went to bed. Fifty-one percent said they adjusted their thermostats to make the heating or air conditioning run less frequently; 34 percent switched to energy-saving light bulbs while 15 percent installed programmable thermostats.
As we do on every Thursday, we’ll focus the rest of the commentary on the storage levels. U.S. natural gas inventories are expected to have risen by 40 billion cubic feet last week, a Reuter’s poll of industry traders and analysts showed on Wednesday. There were 26 participants in the Reuters poll, with injection estimates ranging from 10 bcf to 58 bcf. Storage rose an adjusted 31 bcf for the same week last year. The five-year average build for that week is 49 bcf.
In last week's report, for the week ended July 15, overall storage climbed 60 bcf to 2.671 trillion cubic feet, below the Reuters estimate of 60 bcf and the five-year average gain for that week of 67 bcf but above the year-ago rise of 55 bcf. The build trimmed the inventory shortfall relative to last year by 5 bcf to 213 bcf, or 7 percent, and left stocks 59 bcf, or 2 percent, below the five-year average. It was the fifth straight week that the inventory gap to year-ago narrowed. A total build this morning at the Reuters survey estimate would trim the shortfall relative to last year by 9 bcf to 204 bcf, or 7 percent, but increase the deficit to the five-year average by 9 bcf to 68 bcf, or 2.4 percent.
In the past four reports, total stocks rose 317 bcf, or 79 bcf per week, versus a 272 bcf adjusted build for the same one-month period last year and a 312-bcf five-year average gain for that period. Early injection estimates for next week's EIA report range from 23 bcf to 41 bcf versus a year-ago build of 29 bcf and a five-year average increase for that week of 47 bcf. If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with 3.544 tcf, 7.7 percent below last November's record high of 3.84 tcf and 1.6 percent below average for that time of year. To get inventories above last year's high by Nov. 1, weekly injections must average 73 bcf for the remaining 16 weeks of the stock building season, well above the five-year average of 55 bcf for that period.