LONDON (Commodity Online): Natural Gas prices softened on the day as the EIA-914 report indicated another stunning supply growth in November.
The November EIA -914 Report again showed very large production growth, much higher than our expectations. Total lower-48 production grew by 920 MMcf/d m/m. October m/m production growth was revised up by 390 MMcf/d to 1370 MMcf/d.
The surge in production could partially be explained by the high gas-directed rig count leading up to November as well as debottlenecking in the Marcellus, the Eagle Ford and the Haynesville shale basins.
This was reflected in the regional production growth numbers with other states, Texas and Louisiana (a proxy for Louisiana Haynesville), which saw the largest growths m/m. Other states, a proxy of the Marcellus, experienced 530 MMcf/d of m/m production growth.
Texas grew by 200 MMcf/d m/m, while Louisiana production edged higher by 140 MMcf/d m/m. For a year-on-year basis, total lower-48 production grew by 6.01 Bcf/d, up from October's 5.9 Bcf/d y/y growth.
As supply continues to swamp the market in the backdrop, the prompt contract shaved off four cents to $2.71/MMBtu on the day despite a colder weather outlook for the Eastern half of the country in the 11-15 day period.
Both the balance of calendar 2012 and calendar 2013 edged higher by five cents to $3.03 and $3.68, respectively. On the demand side, Cheniere Energy has signed yet another SPA but this time with the Korean gas company, KOGAS.
The contract is important for two reasons. First, KOGAS is a large, respected, consumer of LNG, not an LNG marketer. Second, the contract is linked to Henry Hub, marking the first-term LNG deal tied to North American prices. With that said, the deal is still conditioned on Cheniere securing financing for the project.
Cash prices mostly gained with Henry Hub up by 12 cents to $2.71. SoCal Border surged by ten cents to $2.99. Transco-Z6 (NY) tumbled by 42 cents to $3.13.
