This week showed how the natural gas market is capable of throwing off many analysts and traders….despite the ongoing decline in the consumption of natural gas as the winter is slowly departing the US (seeing that one of the prime purposes of natural gas id for heating), the natural gas spot price and future (short term) price zigzagged this week with no clear trend. Despite the zigzag of these commodities prices, they didn’t show major changes on a weekly scale; on a weekly level natural gas spot price fell from begging to end by a small margin and on an average scale (w-2-w) the future (Henry Hub) price rose.
Let’s check out the main figures in the natural gas market for this passing week of ending on 11th of March:
Natural gas spot price – Review and 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
Natural gas spot price (Henry Hub) rose from beginning to end of the week by 1.61% and reached 3.79$/mmbtu at the end of the week. On average, it rose by 0.5% on a daily basis, but the average weekly price was 0.5% below the average weekly price in the previous week.
The Nymex Henry Hub Future Price (April delivery) on the other hand declined last week by 0.94% from beginning to end of the week; however, its average price was 0.7% higher than last week’s average price.
The Contango (the spread between the future and spot prices, i.e. future minus spot) for Henry Hub continue to fluctuate during the week as it settled at the end of the week on 0.1$/mmbtu – the second highest spread this passing week.
This zigzag in prices shows that there wasn’t any clear path natural gas prices took. It could be related to the recent storm that attacked part of the US in the middle of the week, which might have caused some concerns of traders for a rise in consumption even though last week the consumption declined. I still speculate that natural gas prices will continue to drop, even if it will be more moderate than last month’s declines.
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.
Natural gas storage, consumption and production – highlights:
Here are the main highlights of the recent EIA weekly report on natural gas: last week (of 4th of March) the underground natural gas storage (Billion Cubic Feet) fell for the sixteenth straight week, by 4.1%, or 71 billion cubic feet; this draw, was smaller than last week’s draw (85 billion cubic feet) and smaller than the 5-year average draw of 107 BcF.
The natural gas storage reached a total of 1,674 billion cubic feet for all lower 48 states, which is higher by 32 billion cubic feet for the same week in 2010; this is also the lowest level since April 2010. Furthermore, the natural gas storage was higher than 5-year average by 21 BcF.
Natural gas consumption fell in the U.S. during the week ending on March 4th: the average daily consumption in the US decreased by 4.9% compares to the previous week; the main cause for this decline is due to the drop by 7.1% compare to the previous week in residential and commercial sectors’ consumption.
In total, natural gas imports, consumption and storage fell during that week, while production rose.
For further reading (on this site):
Previous issues of weekly report:
- Gas prices keep on falling – Weekly recap 28 Feb- Mar 4
- Natural gas spot price fell but future rose – Weekly recap 21-25 February