Natural gas prices (Henry Hub spot) continue their sharp decline with no end in sight. During January natural gas spot price fell by 24.5% and the future price (February delivery) plummeted by 21.74%. This sharp drop in natural gas prices isn’t just due to the late arrival of winter in the U.S. mainly in the Northeast region (some even speculate if there will be at all any extreme cold weather this season), it is also due to the plethora of natural gas that the U.S. has in storage which only helps pull down natural gas prices.
Here is a short review of the changes of natural gas price for the week ending on January 20th, the third week of 2012:
Natural Gas – Weekly Review and Analysis
The Nymex Henry Hub Future Price (short term delivery) sharply declined during last week by 12.36% and reached on Friday $2.34 /mmbtu; its average daily change was -3.19%, and its weekly average price was 14.66% below the previous week’s average price.
Natural gas price (Henry Hub spot) also sharply decreased by 15.41% during the week, and its average price was 14.35% below last week’s average price.
The difference between the Henry Hub future and spot , 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) shifted from Backwardation during most of the week to Contango by the end of the week; on Friday the gap rose to $0.09/mmbtu, i.e. Contango.
Natural Gas Charts
The following charts shows the daily changes of natural gas prices (Henry Hub) and futures prices (Nymex Henry Hub) in $/mmbtu during January 16th to January 20th.
The first chart presents the development of natural gas price (Henry Hub future and spot) during last week: the natural gas price (spot and future short term delivery) continued its sharply downward trend during last week.
The second chart presents the daily percent changes of natural gas price (Henry Hub spot and future). The sharpest decrease in the natural gas price (future) was on Tuesday, while the Henry Hub future price rallied on Friday by nearly 0.9%.
Natural Gas Storage Update – EIA Report:
According to the recent NG report, the underground natural gas storage (Billion Cubic Feet) fell last week by 2.58% and reached 3,290 billion cubic feet for all lower 48 states; the current natural gas storage is 20.8% above the 5-year average, and is 19.6% above the storage level during the same week in 2011. As a comparison, during the same week in 2011 the total natural gas extraction was 243 Bcf. This means that not only the natural gas storage levels are high, but also the extraction is still very low for the season.
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