Much like major other commodities including crude oil and gold, so did natural gas was affected last week by the strong US dollar; by the end of last week, natural gas prices finished with falls as both the e Henry Hub spot and future price settled at 4.24$/mmbtu – the lowest price level since mid April 2011. Nonetheless, since natural gas price stated off the week strong, the average prices were still higher compared to the previous week.
Let’s review the main changes in natural gas prices for the week ending on May 6th:
Natural gas prices 2011 May – Review and Analysis
Natural gas spot price (Henry Hub) fell from beginning to end of the week by 7.83% and reached 4.24$/mmbtu on Friday; Its average daily change was -1.19%, but its weekly average was 2.78% above the previous week’s average price.
The Nymex Henry Hub Future Price (June delivery) declined by 9.65% during the week, and its average price was 0.09% above 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) shifted very rapidly during the week but at the end of the week reached 0$/mmbtu, i.e. the spot price was equal to the future price.
This might suggest that the rapid increase in natural gas prices during the second half of the April won’t repeat in May.
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 2-6.
The chart presents the rapid downward trend of this energy commodities prices mainly during the second half of last week.
In the chart above, one can see the sharp fall in the Henry Hub spot and future prices in the last couple of days of 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 April 29th: The underground natural gas storage (Billion Cubic Feet) increased for the fourth straight week, last week by 4.3%; this was a 72 Bcf injection, as the total storage reached 1,757 billion cubic feet for all lower 48 states; the natural gas storage was 1% below the 5-year average, and 11.4% below the storage level during the same week in 2010.
The chart below shows that during February 2011, the natural gas consumption in the US dropped by 15% compared to January 2011. This might have explained the decline in natural gas prices at that time.
The correlation between the monthly percent changes of prices and consumption during 2010 and 2011 is 0.7 – a strong positive correlation, as expected.
In total, natural gas prices, production, consumption and storage rose, while imports fell during the week ending on April 29th.
For further reading (on this site):
- Natural gas storage rose for fourth week | EIA review, May 6
- Natural gas prices outlook for May 2011
Previous issues of weekly report:
- Natural gas prices finished the month rising – 25-29 April
- Natural gas prices continue their rise for second week – 18-21 April
- Natural gas prices made a comeback last week– 11-15 April