Natural gas prices (Henry Hub) inclined very sharply a couple of weeks ago, but this week they have changed direction and fell mainly during the second half of the week. The rise was probably stemmed from high demand for natural gas to the electric sector. The heat wave that attacked the US during the last few days might pull up natural gas prices or at least keep them high, until the high usage of air conditioners will drop.
Despite the shifts in demand for natural gas, US natural gas storage continues to stock up.
Here is a short review of the main changes in natural gas prices for the week ending on July 22nd:
Natural gas prices 2011 July – Review and Analysis
Natural gas spot price (Henry Hub) decreased during the week by 3.04% and reached on Friday to $4.46/mmbtu; its average daily change was -0.12%, but its weekly average price was 3.72% above the previous week’s average price.
The Nymex Henry Hub Future Price (August delivery) also declined by 3.21% during the week, and its average price was 1.9% 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) remained in backwardation during the week, and by Friday it reached $0.06/mmbtu.
Natural gas prices chart
The following chart shows the daily changes of natural gas prices (Henry Hub) and futures prices (Nymex Henry Hub) in $/mmbtu during July 18-22.
The chart shows natural gas prices had a downward trend during last week; the Henry Hub spot price fell sharply mainly during the second half of the week.
The second chart shows the daily percent changes of natural gas prices (Henry Hub) and Nymex Henry Hub, (the changes around the weekly trend); it shows that natural gas future price started the week with moderate changes, but on Thursday it fell sharply by 2.4%; natural gas spot price started the week with sharp rises, but changed direction to decreases during the second half of the week.
EIA Natural gas report – highlights:
The underground natural gas storage (Billion Cubic Feet) inclined last week by by 60 Bcf to 2.671 billion cubic feet for all lower 48 states – the highest stock level since January 14th, 2011; the natural gas storage is still 2.2% below the 5-year average.
The chart below shows the natural gas storage (weekly figures) and Henry Hub natural gas prices during 2010-2011, and the seasonality effect of natural gas storage; it also shows the slowly upward trend of natural gas spot price in recent weeks. The Henry Hub is still $0.07/mmbtu below its price level the same week last year.
To sum up, natural gas storage, imports, production and consumption inclined during the week of July 15th.
For further reading:
Previous issues of weekly report: