This short week brought many fluctuations in natural gas prices, but not so for Crude oil prices; here is a weekly recap for this passing week of December 20-23 for crude oil prices and natural gas prices:
Crude oil prices didn’t show many fluctuations, however it did present a slow and steady upward trend; the Europe Brent spot price, showed a moderate upward trend as it’s nearing the 94 USD/b; The average weekly spot price for WTI was higher this week by 1.6% compare to last week’s average prices, while the average Brent prices were 2.2% higher compare to last week.
Natural gas prices, despite the increase in demand for it due to the cold weather, continue to fall on a weekly scale even though some of these indexes such as the Nymex Henry Hub Future zigzagged with one day rise followed by a one day fall; the NY gate spot price continued to show staggering rises and falls, however it too on a weekly scale dropped dramatically.
There is also an apparent uncertainty behavior as investors still flip flop between the Euro and USD – the EURO/USD reaching this week as low as 1.31, and as high as 1.3131.
Nevertheless, since this week was a short one due to the Holidays (Christmas), it’s customary to see market fluctuating as there is less volume because people and companies trade less before major holidays.
Prices Analysis:
* This figure is calculated based on the percent change from the price at the beginning of the week compare to the price at the end of the week
The table above shows moderate rises of crude oil prices as the WTI crude oil price ranged between 88.68 $/b and 90.91 $/b – a range of 2.23$/b, which is much higher than the range from last week. This fluctuation represents an increase in the volatility of crude oil prices compare to last week, which could be due to the low volatility, as mentioned before.
On average, the spot price of WTI changed daily by 0.81% and its price increased by 2.51% from the beginning to the end of the week.
In regards to natural gas prices, the picture is a bit more complex: the Nymex Henry Hub Future Prices and Henry Hub Spot had a daily average change of 0.12% and 0.46%, respectively; however, all commodities prices related to Natural gas showed a decline from beginning to end of the week, with New York City Gate Spot price leading the fall with a 31.3% decrease. By the end of the week, the New York City Gate Spot price reached 7.2 USD/mmbtu, after falling as low as 5.8 on Wednesday; This passing week’s average price fell by 33% for compare to last week’s average price.
The Henry Hub Spot and Nymex Henry Hub Future Prices had a much more moderate price changes from last week as their average weekly price fell by 4.2% and 1.6%, respectively compare to last week’s average prices.
In total it seems that natural gas prices are falling, which is part of a downward trend for the last couple of weeks (except New York City Gate Spot price), despite the increase in consumption for natural gas throughout Europe and the U.S.
* This figure is calculated based on the percent change from the price at the beginning of the week compare to the price at the end of the week
In regards to the erratic fluctuation of 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 24% and then falling by over 29%.
Storage of Crude oil for the passing week – main highlights:
According to this week’s EIA report, the ongoing rise in energy consumption is reflected by the incline of heating oil price by 0.02 USD/g, reaching an average of 3.26 USD/g,; this price is 0.51 USD/g higher then last year’s price.
After several weeks of Finished Motor Gasoline stocks showing a downward trend, last week there was a moderate rise as the stocks rose by 1.5% and 1 million barrels reaching 70.2 million barrels, which is still, however, a very low count.
The Stocks of Total Gasoline also rose by 1.1% which is 2.4 million barrels, and reaching 217.2 million barrels.
Propane: the ongoing cold weather in the U.S. is one of the main reasons for the continuous rise in propane consumption; as a result, the propane stocks fell dramatically by 3.5 million barrels which is a 5.7% decline – the sharpest decline in this season, reaching 57.6 million barrels – the lowest level since July 2010. The Midwest region was responsible for most of the inventory depletion this week, as it drew 2.1 million barrels.
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 4.1 percent incline for Nymex Henry Hub Future Prices at the beginning of the week, and a 4.25 percent decline the following day.
For further reading:
- NY City Gate Spot rose yesterday by 24% – daily recap 23 Dec (in this site)
- The season of Gasoline prices & Crude oil stocks update –Dec 23 (in this site)
- Weekly outlook for Crude oil, Natural gas and Gold 20-24 Dec (in this site)
- Crude oil and Natural gas prices – Weekly recap 13-17 of Dec (in this site)
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