Here is your weekly recap for the week ended on December 17th for crude oil prices and natural gas prices:
This week was characterized with Crude oil prices not showing appeared trend as investors seem to continue circling the wagons as the price didn’t change much; the Europe Brent spot price, unlike WTI, showed a very moderate upward trend as it’s still hovering above 90 USD/b; Natural gas prices, despite the increase in demand for it due to the cold weather, continue to fall, except for NY gate price that continue to show staggering rises and falls.
The average weekly prices for WTI were lower this week by 0.3% compare to last week’s average prices, while the average Brent prices were 0.9% higher compare to last week.
There is also an apparent uncertainty behavior of investors as they still flip flop between the Euro and USD – the EURO/USD reaching this week as low as 1.3188, and as high as 1.3391.
The table above shows moderate fluctuations for crude oil prices as the WTI crude oil price ranged between 87.7 $/b and 88.62 $/b – a range spread of 0.94$/b, which is lower than the range spread from last week. This fluctuation represents a decrease in the level of volatility of crude oil prices compare to last week.
On average, the spot price of WTI changed daily by -005% and its price decreased by 0.68% from the beginning to the end of the week.
In regards to Natural Gas prices, there is a more complex change as the prices fluctuated very franticly throughout the week. In particular, the Nymex Henry Hub Future Prices and New York City Gate Spot price declined by nearly 8% from beginning to the end of the week, while the Henry Hub Spot had a 11.3% fall; however, the New York City Gate Spot price rose much more then the rest of the indexes throughout the week as it rose at the beginning of the week by 105% reaching a high price of 14.52 USD/mmbtu; Compare to last week’s average price, it rose by 85%.
The Henry Hub Spot and Nymex Henry Hub Future Prices had a much more moderate changes from last week as their average weekly price fell by 5.9% and 4.6%, respectively compare to last week’s average prices.
On average, the Nymex Henry Hub Future Prices changed daily by -1.62%, while the Henry Hub Spot changed daily by -1.52% throughout the week.
In regards to the erratic changes in the New York City Gate Spot price there is speculation around the reasons for its price’s behavior: Since the NY gate price is a spot not future price, the current demand for this commodity is linked to its price, i.e. when there is a shortage of Natural gas to the U.S. Northeast region, due to excess demand, because of cold weather, the price of this commodity jumps high, and when the demand is met, it falls. According to the EIA: City gate prices “represent the total cost paid by gas distribution companies for gas received at the point where the gas is physically transferred from a pipeline company or transmission system”. As such, this could mean that any time when there is a shortage in gas because of delay in transfer from a Pipeline Company or transmission system, the Natural gas prices will jump up promptly and radically. This could offer an explanation for NY gate price rising one day by 105% and then falling by over 20%.
Storage of Natural gas for the passing week:
After last week’s small fall in Natural gas underground storage (Billion Cubic Feet) by 2.3%, this week there was a larger fall of 4.4%, which is a drop of over 164 Billion cubic feet, and reached 3,561 (Billion Cubic Feet) for all lower 48 states.. This big drop was expected as there is an increase in consumption of energy throughout the US mainly for heating purposes. These levels of storage are very high and similar to the storage level at the beginning of October 2010, before winter time.
According to the EIA report and its published data for the week until 15th of December, there was a rise in consumption due to the extremely cold weather: the consumption rose by 4.3% to an average of 96 Bcf/day; however, Natural gas prices didn’t rise, and if any, they fell sharply probably due to the high storage levels and good supplies (no impediments) as presented above; according to the report, the Henry Hub price, after rising for several weeks, it seems that the upward trend has shifted and during the week of the report (8-15 Dec) it fell by 0.24 USD/ MMBTU and reaching 4.22USD.
The following graphs show the changes of WTI spot price, Europe Brent spot price and NYMEX future prices:
In the final graph it shows the crude oil prices and natural gas price (Nymex Henry Hub Future Prices) daily percent change ranging between 4.3 percent decline for Nymex Henry Hub Future Prices at the middle of the week, and a 0.83 percent incline for Brent Crude oil Prices.
For further reading:
- Natural Gas storage decline as winter progresses–Dec 17th (in this site)
- Crude oil stocks fall as winter progresses– news update for December 16th (in this site)
- A monthly recap of Natural gas prices and Crude oil prices for November 2010 (in this site)
- Goodness gracious great ball of… Natural gas – Gas on the rise– news update for December 9th (in this site)