Natural Gas - Highlights Of The Year In Review

On Friday the EIA released their 2010 Natural Gas Year In Review, the agency's annual report on the natural gas market.  A few of the highlights:

• Onshore marketed production increased from 51.5 Bcf/day to 54.6 bcf/day, year over year.
• Offshore marketed production decreased from 6.7 Bcf/day to 6.2 Bcf/day, year over year.
• Demand increased to 66.0 Bcf/day, with large gains coming from natural gas-fired power plants.
• Industrial natural gas demand increased to 18.1 Bcf/day from 16.9 Bcf/day, year over year.  The 5-year average is 17.9 Bcf/day.
• Net imports decreased by 0.2 Bcf/day to 7.1 Bcf/day, the lowest net imports since 1994.
• Storage inventories reached 3,847 Bcf at the end of October, a new record level for the end of the injection season (April-October). 
• Henry Hub prices increased to average $4.52 in 2010 vs $4.06 in 2009. 

Given that the report is backward looking by nearly a year, here's our fifteen second summary of the current state of the domestic gas market as it relates to prices and hedging. 

• The market continues to provide great hedging opportunities for end-users, not so much for producers.
• Over the course of the past six weeks, cash gas prices at Henry Hub have averaged $3.316. 
• Currently, the one and two year NYMEX natural gas forward curves are appoximately $3.48 and $3.80, respectively.  The last time either traded below their current levels was 2002.

For those of you interested in perusing the EIA's entire report, you can access it via this link.

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