Natural Gas Spiked Over $5

The price of natural gas continues to sharply rise as the price passed the $5 mark at the end of last week – the last time the price passed this threshold was back in June 2010. The average weekly price was also 1.9% higher than the previous week. In the recent EIA report, the natural gas storage fell by only 107 Bcf. Last week’s extraction was lower than last year’s and the five year average rate. The current high volatility of the price of natural gas is likely to remain as long as the U.S weather continues to play a significant role on the demand for natural gas.

The Nymex Henry Hub Future (short term delivery) spiked by 19.8% and reached by Friday $5.18/mmbtu; its average daily change was 3.74%; its weekly average rate was 7.76% above last week’s average price.

The gap between the NG future and spot prices – future minus spot – shifted to Backwardation during last week.

Natural Gas Charts

The following charts show the shifts in Nat-gas future (Nymex Henry Hub) in $/mmbtu during January 20-24.

Natural Gas price  chart -January 20-24 2014As you can see from the chart above, the natural gas price (Henry Hub future rate) jumped mainly on Tuesday and Friday.


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

Natural Gas chart - percent change January 20-24 2014The underground natural gas storage (Billion Cubic Feet) fell again for the tenth consecutive time this season during last week by 4.23% or by 107 Bcf; the storage reached 2,423 billion cubic feet for all lower 48 states; the current storage is 13% below the 5-year average and is 20% lower than the storage during the same week in 2013. The recent extraction was lower than last year and than the five year average: During the same week in January 2013the natural gas extraction was 172 Bcf, and the five year average extraction from storage for the same week of January was 192 Bcf. This week’s extraction was mostly due to the eastern consuming region, in which the extraction was 67 Bcf.

Weather and natural gas

The current forecasts are that the temperatures are expected to be higher than normal in the East coast, but could remain well below normal levels in the North and most of central of the U.S. 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 elevated in the near future. Further, during last week’s heating degrees days were estimated to be higher than normal and last year’s.

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