Summary

Natural Gas:

The NYMEX prompt-month contract decreased $0.05 per million British thermal units (MMBtu) to $3.65/MMBtu last week. The 12-month NYMEX strip price was up $0.36/MMBtu to $5.50/MMBtu. Last week, the Henry Hub cash price decreased $0.03/MMBtu to $3.34/MMBtu

NYMEX has placed limits on the number of positions that traders can hold on the exchange. The Intercontinental Exchange (ICE) plans to place similar limits on its exchange. The U.S. Natural Gas Fund exchange traded fund plans to liquidate some positions to meet position requirements.

Storage:

The Energy Information Administration (EIA) storage inventory for the week ending July 24 rose by 71 billion cubic feet (Bcf) to 3.023 trillion cubic feet (Tcf). The build was at the low end of expectations. The storage level is 478 Bcf above the five-year average and 571 Bcf more than the same period in 2008.

U.S. natural gas storage reached 3 Tcf in record time this year. The previous record was set Aug. 31. Gas Daily reported that some analysts think that interruptible storage injections could soon be restricted and lead to some wellhead shut-ins. Canadian storage is also very high for this time of year.

Weather:

This week, areas from the south, and central U.S. to the Northwest should be warmer than normal and the Great Lakes area should be cooler than normal. The region east of the Rockies should have warmer-than-normal weather, and the region west of the Rockies should have cooler-than-normal weather during the six- to 10-day and eight- to 14-day time frames.

Imports:

Send-out volumes last week from liquefied natural gas (LNG) terminals totaled about 1.1 billion cubic feet per day (Bcfd), which was 0.1 Bcfd higher than a year ago. Canadian imports were 7.5 Bcfd, which was 0.7 Bcfd less than last year.

Exploration and production:

The total U.S. oil and gas rig count increased by five last week to 948 rigs. The rig count has dropped 53 percent (1,083 rigs) since its peak in September. The number of rigs drilling for gas was up by two. The Canadian rig count increased by 20 to 200 rigs.

Electricity:

Electricity generation for the week ending July 25 was 4.2 percent lower than the prior week and 11 percent lower than a year ago. Year-to-date electricity usage is 4.5 percent lower than last year.

Petroleum:

The NYMEX West Texas Intermediate (WTI) prompt-month contract settled at $69.45 per barrel (Bbl) on Friday, up $1.40/Bbl for the week after positive economic news last week. The spread between the prompt-month contract and the 12th-month contract narrowed during the week from $9.23/Bbl to $8.17/Bbl on Friday. Brent crude settled at $68.34/Bbl on Friday. U.S. retail gasoline prices rose 5 cents last week to $2.52 per gallon. That was the 10th consecutive daily increase.

For the week ending July 24, crude oil inventories increased by 5.1 million barrels (MMBbls), distillate inventories increased by 2.1 MMBbls, and gasoline inventories decreased by 2.3 MMBbls. The crude oil inventory increase was greater than expected as was the build in distillate inventories. The drawdown in gasoline inventories was larger than expected. Storage levels at Cushing were higher by 1.3 MMBbls at 32.1 MMBbls last week. U.S. refinery utilization fell 1.2 percent to 84.6 percent.

Compared to last year, the EIA estimates that the four-week rolling average U.S. gasoline demand was up 0.8 percent, distillate fuel demand was down 10.7 percent and jet fuel demand was down 13.3 percent. Total products supplied to the U.S. market were down by 4.1 percent.

Tanker tracker Oil Movements noted that crude oil exports from OPEC are forecasted to drop 150,000 barrels per day (Bpd) to 22.53 MMBpd for the four weeks ending Aug. 15.

Economy:

The U.S. gross domestic product fell at an annual rate of 1 percent in the second quarter. That was a significant improvement from the 5.4 percent contraction in the fourth quarter and a 6.4 percent contraction in the first quarter. Consumer spending shrank at a worse-than-expected 1.2 percent in the second quarter.

New homes sales were up 11 percent in June over May which was the highest rate since November. The inventory of new homes is 8.8 months at the current sales pace. The total unsold homes are at a 10-year low. The Standard & Poors/Case Shiller home price index for 20 major cities rose for the first time in three years.

Durable goods orders fell 2.5 percent in June. However, the durable goods orders, excluding automobiles, rose 1.1 percent. Inventories fell for the sixth month in a row.

The federal government sold $235 billion in debt last week with mixed results. The federal government is expected to issue a total of $3.4 trillion in debt during this and the next fiscal year. Last week the U.S. dollar fell to a seven-month low.

The “cash-for-clunkers” car trade-in program, which began on July 24, ran through the alloted $1 billion in only a week. Congress is considering additional funds for the program.

The Conference Board’s leading economic indicators in the Eurozone rose in June and the trend indicates that an economic recovery might begin before year end. Japanese industrial output rose for the fourth straight month in June.