The natural gas market continues its comeback as its prices kept on rising for the second straight week; during last week the Henry Hub future (May delivery) reached by Thursday, April 21st 4.41$/mmbtu and spot price reached 4.33$/mmbtu. Both prices reached their highest level during April so far.
Let’s review the main changes in natural gas prices for the week ending on April 21st:
Natural gas spot and future prices – Review and Analysis
Natural gas spot price (Henry Hub) increased from beginning to end of the week by 6.57% and reached 4.33$/mmbtu on Thursday; Its average daily change was 1.22%, and its weekly average was 3.07% above the previous week’s average price.
The Nymex Henry Hub Future Price (May delivery) rose by 2.36% during the week, and its average price was 3.64% above last week’s average price.
The spread between the future and spot prices, i.e. future price minus spot price (if the spot prices are higher than the future prices its called Backwardation, if future price is higher than its called Contango) for Henry Hub fluctuated throughout ranging between Backwardation and Contango, by the end of the week it reached 0.08$/mmbtu, i.e. Contango. These fluctuations might be related to the uncertainty in this market.
The comeback of natural gas prices might also be related to the lower than normal temperatures and rain and thunderstorms in Northeast of the US that rose the demand for natural gas. Also in the recent EIA report it was noted that the average heating temperature in residential and commercial buildings has risen compared to last year. This also could be among the reasons for the higher than normal consumption of NG during this season.
Natural gas price charts
The following chart shows the daily changes of natural gas spot price (Henry Hub) and futures price (Nymex Henry Hub) in $/mmbtu during the week of April 18-21.
The graph presents the upward trend of these energy prices during last week.
The second graph shows the daily percent changes of natural gas spot price, Henry Hub, and futures price, Nymex Henry Hub, (the changes around the weekly trend). It presents the fluctuations during the week of both spot and future price and the no clear pattern they had during the week.
Natural gas storage, consumption and production – highlights:
Here are the main highlights of the recent EIA weekly report on natural gas and regarding the week ending on April 8th: The underground natural gas storage (Billion Cubic Feet) rose for the second straight week by 2.9%,; this was a 47 Bcf injection, and the total storage reached 1,654 billion cubic feet for all lower 48 states; the natural gas storage was 24 Bcf above the 5-year average.
U.S. natural gas consumption rose by 6% during the week, and the residential and commercial sectors’ consumption increased by 14.2%, mainly due to the colder than normal weather.
The chart below shows the total natural gas storage (weekly figures) and Henry Hub spot price changes during 2011; notice that during this year the natural gas prices dropped during February and from mid March started to pick up again. This pattern might be related to the comeback of the winter-like temperatures during March and are still in certain parts in the US.
In total, natural gas consumption, imports, production and storage rose during the week ending on April 15th.
For further reading (on this site):
- Natural gas storage rose for second week | EIA review, April 22
- Natural gas prices outlook for April 2011
Previous issues of weekly report:
- Natural gas prices made a comeback last week– 11-15 April
- Natural gas prices kept on freefalling most of the week – 4-8 April
- Natural gas prices shifted direction to a rise – Weekly recap 21-25 March