Natural gas spot price
During the week, there were extreme cold weather in many parts throughout the US and Canada; e.g. there were many reports of heavy snow in the Midwest of the US. This affected above all for the volatility of natural gas prices during the week, and despite the sharp rises in the beginning of the week, the prices have sharply declined at the end.
Let’s check out the main figures for this passing week of January 31 to February 4th:
This passing week’s average NY gate natural gas spot price fell by 18.4% compare to last week’s average price, however, the cold weather and snowfall during the middle of the week caused a hike in demand and consequentially the NY city gate natural gas spot price, rose sharply by over 30% on Wednesday, only to during the rest of the week resulting in a decline of ~24% from beginning to the end of the week.
Natural gas spot price (Henry Hub) also fluctuated during the week; at the end of the week it reached 4.47$/mmbtu – a 0.9% incline from beginning to end of the week. On average, it rose by 0.88% on a daily basis, and the average weekly price is 1.3% below the average weekly price in the previous week.
The Nymex Henry Hub Future Price (March delivery), on the other hand, declined by 2.5% from beginning to end of the week; and its average price was 1.5% lower than last week’s average price.
The backwardation (the spread between the future and spot prices) for Henry Hub reached during the week a high spread of -0.36$/mmbtu – the largest spread in several months. This could be an indication of the market expecting that the price of natural gas to decline next month – upon the expiry of the March futures.
Natural gas price chart
The following chart show the changes of natural gas spot price (Henry Hub) and futures price (Nymex Henry Hub) in $/mmbtu for this passing week:
The final graph shows the natural gas spot price (Henry Hub) and futures price (Nymex Henry Hub) daily percent change during last week..
Here are the main highlights of the recent EIA weekly report on natural gas: in my last review about U.S. Natural gas storage showed for the week of 21st of January a drop of 7.4% in underground natural gas storage (Billion Cubic Feet), i.e. a decline of over 165 billion cubic feet. this draw is much higher than the 5-year average draw of 165 BcF; that being said, the natural gas storage is higher than the five year average, but only by 0.2%.
Due to the extreme cold weather (see below) there was a sharp incline in natural gas consumption of 10.7% during the week of January 28th compare to the previous week, and 1 percent higher than the same time last week. The prime contributor was the electric power system in the Southwest.
In total, natural gas consumption inclined, while natural gas storage, prices, production and imports declined.
A suggested reason for the decrease in natural gas spot price during that week could be because there was perhaps a lag in the pressure by the demand to drive prices up (effect of the sharp increase in consumption).
For further reading (in this site):
- Natural gas consumption continues to rise | EIA review, February 4
- Natural gas prices outlook for February 2011
- Natural gas price outlook – 2 February
Previous issues of weekly report: