The U.S. Energy Information Administration's (EIA) most recent monthly production data indicates that total U.S. average daily marketed production reached 70.4 billion cubic feet per day (Bcf/d) in November 2012, 0.4 Bcf/d above the previous month, with upticks in the federal Gulf of Mexico, Oklahoma, Wyoming, and the category for other states, which includes Pennsylvania. Production in the Marcellus Shale areas of Pennsylvania and West Virginia is expected to continue rising, as recently drilled wells become operational. Despite relatively low natural gas prices, Pennsylvania drilling continues at a strong pace as producers target combination oil-and-gas wells. According to EIA’s recently released Short-Term Energy Outlook for February, projected marketed production increases from 69.2 Bcf/d in 2012 to 70.0 Bcf/d in 2013, and remains flat in 2014.
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Average natural gas spot prices at major trading hubs decreased between 11 and 15 cents per MMBtu over the report week, with the notable exception of pricing points located in the Northeast, which decreased by about $5.00 per MMBtu for the report week. The winter storm that hit the Northeast over the weekend pushed natural gas prices at Algonquin Citygate and Transco Zone 6 New York above $30 per MMBtu and and $20 per MMBtu, respectively on Friday. With warmer weather, the prices at Algonquin Citygate and Transco Zone 6 New York decreased to $17.85 per MMBtu and $6.10 per MMBtu respectively yesterday. Similarly, warmer weather in most parts of the country this report week compared with the previous week likely contributed to decreases in natural gas spot prices at major trading hubs outside the Northeast.
The Nymex March futures price fell from $3.418 per MMBtu last Wednesday to $3.306 per MMBtu yesterday. During the week, the futures price spread over the Henry Hub daily spot price averaged between -10.5 and 7.9 cents per MMBtu. The 12-Month Strip (average of March 2013 to February 2014 contracts) lost 9 cents per MMBtu, starting at $3.725 per MMBtu last Wednesday and landing at $3.638 per MMBtu yesterday.
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According to estimates from BENTEK Energy Services LLC (Bentek), average natural gas consumption for the nation fell this report week by 8.4 percent over last week’s daily average. Natural gas consumption decreased in all sectors and most notably in the residential/commercial sector, which fell by 13 percent for the report week. This is the result of warmer weather in most parts of the country compared with the previous week.