Natural gas market continues its comeback – 23-27 May

Natural gas prices (Henry Hub) are starting to pick up again; during last week, despite the shift in the seasons in the U.S. there is a change in the direction of natural gas prices as the Henry Hub short term future price reached by the weekend 4.52$/mmbtu – the highest  price level since May 4th 2011.

 

This rise might be stimulated by speculation and low volume trading of natural gas, but could also be stemmed from the recent rise in consumption, mainly in the electricity sector, and the concerns over the transfer of natural gas via pipelines that might have been damaged from the recent flooding and tornados in parts of the US (see here for more on this subject).

In summary, natural gas prices inclined during the week, and might continue to do so if these factors listed above will continue to affect this market.

 

Let’s review the main changes in natural gas prices for the week ending on May 27th:

 

Natural gas prices 2011 May – Review and Analysis

 

table natural gas spot price Henry Hub -  23-27 MAY 2011

Natural gas spot price (Henry Hub) inclined during the week by 2.11% and reached by Friday 4.36$/mmbtu; its average daily change was 1.51%, and its weekly average was 4.67% above the previous week’s average price.

The Nymex Henry Hub Future Price (June delivery) also inclined by 4.00% during the week, and its average price was 4.37% below last week’s average price.

 

The spread between the Henry Hub future and spot gas 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) was most of the week in Contango, and by the end of the week it reached 0.16$/mmbtu – the highest spread during last week.

Natural gas prices chart

The following chart shows the daily changes of natural gas prices 2011 (Henry Hub) and futures prices (Nymex Henry Hub) in $/mmbtu during the week of May 23-27.

natural gas price Henry Hub chart -  23-27 MAY 2011 The chart shows the downward trend of spot and future prices during recent week, as the spot price rose mainly at the beginning of the week, and the future price inclined mainly at the end of the week.

 

natural gas SPOT price chart - percent change Henry Hub  23-27 MAY 2011

The second chart presents the daily percent changes of natural gas prices (Henry Hub) and Nymex Henry Hub, (the changes around the weekly trend); it shows the downward trend of the volatility of spot price 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 May 20th: The underground natural gas storage (Billion Cubic Feet) increased for the seventh straight week, last week by 5.5%; this was a 105 Bcf injection – the highest injection since July 12th 2009; the natural gas storage rose to 2.024 billion cubic feet for all lower 48 states; the natural gas storage is still 1.2% below the 5-year average, and 10.2% below the storage level during the same week in 2010 (see chart below).

The chart below shows the natural gas storage (weekly figures) and Henry Hub natural gas prices during 2010 and 2011; the chart demonstrates the rising NG storage and the fall in the NG prices at the first couple weeks of May.

 

natural gas prices chart 2011 (Henry Hub Natural Gas storage 2011 MAY 20

In total, natural gas storage, prices, production and consumption rose, while imports fell during the week of May 20th.

 

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For further reading (on this site):

 

 

Previous issues of weekly report: