Natural Gas Bounced Back to $4.4

The price of natural gas changed direction and tumbled down during the most of the week. Alas on Thursday, following the release of the updated EIA report, in which the natural gas storage plummeted by 285 Bcf, the price of natural gas spiked by nearly 5%. This rally more than offset the drop in natural gas prices during the rest of the week. Last week’s extraction was more than three times last year’s rate and roughly twice as high as the five year average. The recent rally of natural gas might slowdown due to the weather changes in the US. 

The Nymex Henry Hub Future (short term delivery) rose by 1.54% and reached by Friday $4.42/mmbtu – its highest price since July 2011; its average daily change was 0.33%; its weekly average rate was 0.6% above last week’s average rate.

The difference between the NG future and spot prices – future minus spot – shifted from Backwardation to Contango during the previous week.

Natural Gas Charts

The following charts show the changes in Nat-gas future (Nymex Henry Hub) in $/mmbtu during December 16-20.

As you can see in the chart above, the natural gas price (Henry Hub future rate) rallied on Thursday from its fall during the beginning of last week.

Natural Gas price  chart -December 16-20 2013


In the second chart are the daily percent changes of the Nymex Henry Hub future (short term delivery).

Natural Gas chart - percent change December 16-20 2013The underground natural gas storage (Billion Cubic Feet) declined again for the fifth time this season during last week by 8.07% or by 285 Bcf; the storage reached 3,248 billion cubic feet for all lower 48 states; the current storage is 7.4% below the 5-year average and is also 13.1% below the storage during the same week in 2012. The recent extraction was much higher than the five year average: During the same week in December 2012 the natural gas injection was 141 Bcf, and the five year average extraction from storage for the same week of December was 82 Bcf. This week’s extraction was mostly due to the eastern consuming region, in which the extraction was 132 Bcf.

Weather and natural gas

The current outlooks are that the temperatures will remain lower than normal levels mainly in the Northeast but also in most regions throughout the U.S. Considering the expected low temperatures for the season; the demand for natural gas in the residential/commercial sector throughout the U.S. is likely to jump the near future. Finally, the heating degrees days are estimated to be slightly lower than normal but higher than last year’s. These factors could also keep the natural gas prices above the $4.4 mark.

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