Natural gas prices continued to freefall during most of last week; the winter is slowly entering the U.S. but it appears that it’s not cold enough to pressure natural gas prices to rise.
The Contango is still high and was on Friday $0.30 (future price (December delivery) minus spot price for Henry Hub). This should indicate that the market expects natural gas prices to change direction and start to rise, but this shift has didn’t occur up to now. By the end of the week the Henry Hub spot price reached $3.02/ MMbtu. The Nymex Henry Hub Future Price (December delivery) reached $3.32/ MMbtu. The high storage level of natural gas (see below) compared with the five year average might indicate a plethora of natural gas compared to recent years and thus could be among the factors to impede the expected growth in prices.
Here is a short review of the main changes in natural gas prices for the week ending on November 18th:
Natural Gas Prices November – Weekly Review and Analysis
Nymex Henry Hub Future Price (December delivery) sharply fell during last week by 4.05% and reached on Friday $3.32/mmbtu; its average daily change was -1.48%, and its weekly average price was 7.57% below the previous week’s average price.
Natural gas spot price (Henry Hub) also sharply declined by 3.82% during the week, and its average price was 9.02% below 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) continued to be in Contango during the week, and by Friday the gap reached $0.30/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 November 14 to 18.
The chart shows the development of natural gas spot price and Henry Hub future price during last week: the Henry Hub prices had a downward trend during most of last week.
The second chart presents the daily percent changes of natural gas spot price (Henry Hub) and Nymex Henry Hub future price. The sharpest falls came on Monday and the highest gains were on Thursday.
EIA Natural Gas Report – Highlights:
The underground natural gas storage (Billion Cubic Feet) rose last week by 19 Bcf to 3,850 billion cubic feet for all lower 48 states; the current natural gas storage is 6.2% above the 5-year average, and 0.4% above the storage level during the same week in 2010.
To sum up, natural gas storage increased while natural gas production and consumption declined during the week of November 11th.
For the complete natural gas market report, see here.
For further reading:
Previous issues of weekly report: