Weekly Energy Perspective

Natural Gas:

The NYMEX prompt-month contract decreased $0.34 per million British thermal units last week to $3.92/MMBtu on Friday. The 12-month NYMEX strip price was down $0.24/MMBtu to $4.73/MMBtu. Last week, the Henry Hub cash price decreased $0.125/MMBtu to $3.94/MMBtu.

The EIA has changed its reporting methodology for natural gas production. Production estimates for January 2010 were lowered by 0.6 billion cubic feet per day (Bcfd).

Storage:

The EIA storage inventory for the week ending April 23 rose by 83 billion cubic feet (Bcf) to 1.912 trillion cubic feet (Tcf). The build was higher than the expected 70 Bcf. The storage level is 303 Bcf above the five-year average and 101 Bcf more than the same period in 2009.

Weather:

The upper two-thirds of the nation will have colder-than-normal to much-colder-than-normal temperatures during the six- to 10-day period. The southern part of Texas and Florida will have warmer-than-normal temperatures during the same period. During the eight- to 14-day period, most of the upper half of the country will have colder-than-normal temperatures while the southeast regions will have warmer-than-normal temperatures. The remainder of the country will have normal temperatures.

Imports:

Send-out volumes last week from LNG terminals totaled about 0.88 Bcfd, which was 0.7 Bcfd less than a year ago. Canadian imports were 6.76 Bcfd, which was 1.07 Bcfd more than a year ago.

Exploration and production:

The total U.S. oil and gas rig count increased by one last week to 1,483 rigs. The gas rig count increased by two and stands at 958. The Canadian rig count decreased by two to 108.

A new study by the North Dakota Industrial Commission indicates that the Three Forks-Sanish formation could hold up to 1.9 billion barrels of recoverable oil based on current technology.

Electricity:

Electricity generation for the week ending April 24 was 1.1 percent less than the prior week and 2.9 percent less than a year ago. Year-to-date electricity usage is 2.2 percent higher than last year.

Petroleum:

The NYMEX WTI prompt-month contract settled at $86.15/Bbl on Friday, up $1.03/Bbl for the week.  ICE Brent futures closed at $87.44/Bbl on Friday up $0.19/Bbl for the week.

For the week ending April 23, crude oil inventories increased by 2 million barrels (MMBbls), distillate inventories increased by 2.9 MMBbls, and gasoline inventories decreased by 3 MMBbls. The decrease in gasoline inventories was unexpected. U.S. refinery utilization increased 3 percent to 89 percent.

Compared to last year, the EIA estimates that the four-week rolling average U.S. gasoline demand was up 3.1 percent from last year. Distillate fuel demand was up 1.5 percent and jet fuel demand was down 4 percent. Total products supplied to the U.S. market were up by 1 percent compared to last year. According to the American Automobile Association, the weekly average U.S. retail gasoline price rose $0.031 to $2.883 per gallon.

The Nigerian militant group, Movement for the Emancipation of the Niger Delta, attacked a Brass River oil terminal cutting production by 12,000 barrels per day. The terminal operator Eni declared a force majeure on deliveries from the terminal.

Economy:

U.S. gross domestic product grew at 3.2 percent during the first quarter 2010 as a result of increased household spending. Consumer spending which accounts for about 70 percent of the U.S. economy rose by 3.6 percent in the first quarter. The increase was the largest since first quarter 2007.

The Consumer Confidence Index rose to 57.9 in April to its highest level since September 2008. The index measures how consumers feel about business conditions, the job market and the economy for the next six months.

The World Bank forecast global economic growth of 3.1 percent this year last week, more than the 2.7 percent it forecast in January, however it is still cautious about the fragility of the economy in some advanced countries.

Chinese manufacturing grew at an accelerated pace in April. The Purchasing Manager’s Index rose to 55.7 up from 55.1 in March. This compares to the record low of 38.8 recorded in November 2008 during the credit crisis.

Photo: Ansel Adams, Yosemite

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