Natural gas market kept on slowing down – 16-20 May

Natural gas prices (Henry Hub) fell during the recent week as the Henry Hub spot price reached by the weekend 4.05$/mmbtu – the lowest price level since March 22nd 2011. This decline is inline with the rising temperatures throughout the US and the seasonal shift in natural gas demand. The flooding of the Mississippi River is still a major concern as it might impede transfer of natural gas, but for now it didn’t have much of an effect.

Let’s review the main changes in natural gas prices for the week ending on May 20th:

Natural gas prices 2011 May – Review and Analysis


table natural gas spot price Henry Hub - 16-20 MAY 2011

Natural gas spot price (Henry Hub) declined during the week by 2.04% and reached by Friday 4.05$/mmbtu; its average daily change was -0.05%, and its weekly average didn’t change much and was 0.04% above the previous week’s average price.

The Nymex Henry Hub Future Price (June delivery) also declined by 3.8% during the week, and its average price was 0.67% 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 0.18$/mmbtu – the highest spread this month so far.

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 16-20.


natural gas price Henry Hub chart -  16-20 MAY 2011

The chart shows the downward trend of spot and future prices during recent week, except for future price by the end of the week in which it sharply rose by 3.2%.


natural gas SPOT price chart - percent change Henry Hub  16-20 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) and the high volatility of both prices as they have shifted above and below the zero mark.

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 13th: The underground natural gas storage (Billion Cubic Feet) inclined for the sixth straight week, last week by 5.0%; a 92 Bcf injection; the natural gas storage rose to 1,919 billion cubic feet for all lower 48 states; the natural gas storage is still 1.8% below the 5-year average, and 10.9% below the storage level during the same week in 2010. Nonetheless, the ongoing incline in the NG storage is inline with the seasonal shift.


natural gas prices chart 2011 (Henry Hub Natural Gas storage 2011 MAY 13

In total, natural gas production and storage rose, while consumption and imports fell during the week ending on May 6th.


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