Natural Gas Jumped Again to Pass $5.5

The price of natural gas rose again during the first half f the week and passed at one point the $5.5 mark – the highest level since January 2010 – only to tumble down in the last two days of the week. The average weekly price was also 15.7% higher than last week. In the latest EIA report, the natural gas storage fell by 230 Bcf. Last week’s extraction was much higher than last year’s and the five year average rate. The current high volatility of the price of natural gas is likely to continue until the U.S weather stops playing a significant role on the fluctuations in the demand for natural gas.

The Nymex Henry Hub Future (short term delivery) declined by 4.6% and reached by Friday $4.94/mmbtu; its average daily change was -0.68%; its weekly average rate was 8.7% above last week’s average price.

The difference between the NG future and spot prices – future minus spot – was mostly in Backwardation during last week.

Natural Gas Charts

The following charts present the developments in Nat-gas future (Nymex Henry Hub) in $/mmbtu during January 27-31.

Natural Gas price  chart -January 27-31 2014As you can see from the chart above, the natural gas price (Henry Hub future rate) jumped mainly at the beginning of the week only to plummet at the end.


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

Natural Gas chart - percent change January 27-31 2014

The underground natural gas storage (Billion Cubic Feet) fell again for the eleventh consecutive time this season during last week by 9.5% or by 230 Bcf; the storage reached 2,193 billion cubic feet for all lower 48 states; the current storage is 16.6% below the 5-year average and is 22.5% lower than the storage during the same week in 2013. The latest extraction was much higher than last year and than the five year average: During the same week in January 2013the natural gas extraction was 194 Bcf, and the five year average extraction from storage for the same week of January was 157 Bcf. This week’s extraction was mostly due to the eastern consuming region, in which the extraction was 124 Bcf.

Weather and natural gas

The current outlooks are that the temperatures are expected to remain lower than normal in the East coast, but could remain above normal in most parts of the west coast. Considering the expected lower than normal temperatures for the season; the demand for natural gas in the residential/commercial sector in central of the U.S. could remain higher in the coming weeks. Finally, last week’s heating degrees days were estimated to be higher than normal and last year’s.

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