Natural Gas – Weekly Recap December 31- January 4

Natural gas (short term delivery) changed direction again and sharply fell mainly during the first part of the week. This drop in prices came after natural gas rallied a week earlier. According to the recent EIA report, the NG storage sharply declined by 135 Bcf; this fall in the storage might have contributed to the rally in natural gas prices on the last day of the week. During last week the Henry Hub future (short term delivery) fell by 5.25%.

Here is a short analysis of the recent developments in natural gas market for the week ending on January 4th 2013:

Natural Gas Market – January Review

The Nymex Henry Hub Future (short term delivery) fell during last week by 5.25% and by Friday reached $3.29/mmbtu; its average daily change was -0.71%, its weekly average price was 3.73% below the previous average price.

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

Natural Gas Charts

The following charts present the changes in Nat Gas future (NymexHenry Hub) in $/mmbtu between December 31- January 4.

Natural Gas price  chart - December 31 January 4 2013

As seen in the chart herein, the NG prices (Henry Hub future and spot) fell during most of last week.

In the second chart are the daily percent changes of the Henry Hub spot and Nymex  Henry Hub future (short term delivery).  The chart presents the downward trend in the price of natural gas during the beginning of the week and shift back to a sharp gain on Friday.

Natural Gas chart - percent change December 31 January 4 2013

NG Storage Update – EIA Report:

Natural Gas Storage

The underground natural gas storage (Billion Cubic Feet) fell during the previous week by 3.7% or by 135 Bcf; the storage reached 3,517 billion cubic feet for all lower 48 states; the current storage is 12.4% above the 5-year average, and 0.7% above the storage during the same week in 2011. During the same week in December 2011 the NG extraction was only 76 Bcf, and the five year average extraction for the parallel week of December was 120 Bcf. This news is likely to further pull up the prices of natural gas. Moreover, based on past years, in the weeks to follow the extractions are likely to rise.

This week’s extraction was mostly driven from Eastern consumption region with an 84 Bcf extraction.

Henry Hub Natural Gas storage and prices 2013 4 January

In the chart herein are the developments (based on weekly numbers) in storage (and Henry Hub spot price in past years. As seen, the price of natural gas has risen last week while the storage levels started to slowly decline.

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