Natural gas spot price finished the week with rises – 14-18 March

The natural gas market continues to slowdown as consumption in the US drops and the natural gas storage declines at a more moderate rate, and yet the prices of natural gas Henry Hub rose this week, mainly future prices (April delivery).

There is some speculation around the cause of the recent natural gas future prices rally, which might be related to the turmoil in Japan (see here for more on this subject).

Let’s review the main figures in the natural gas market for this passing week of ending on 18^th of March:

Natural gas spot and future prices – Review and Analysis

* This figure is calculated based on the percent change from the price at the beginning of the week compare to the price at the end of the week

The Nymex Henry Hub Future Price (April delivery) inclined last week by 6.54% from beginning to end of the week; and, its average price was 3.5% higher than last week’s average price.

Natural gas spot price (Henry Hub) also inclined from beginning to end of the week by 2.56% and reached 4$/mmbtu at the end of the week. On average, it rose by 1.16% on a daily basis, and the average weekly price was 2.1% above the average weekly price in the previous week.

The Contango (the spread between the future and spot prices, i.e. future minus spot) for Henry Hub rose throughout the week as it settled at the end of the week on 0.17$/mmbtu – the second highest spread this passing week.

This recent rally in natural gas prices is something new for this month of March, as natural gas spot price (Henry Hub) rose by 1.8% during March, and future price (April delivery) rose by 7.7%; both these increases are mostly related to last week’s price hikes as seen in the graph below.

Natural gas price chart

The following chart show the changes of natural gas spot price (Henry Hub) and futures price (Nymex Henry Hub) in $/mmbtu for this passing week:

The final graph shows the natural gas spot price (Henry Hub) and futures price (Nymex Henry Hub) daily percent change during last week.

Natural gas storage, consumption and production – highlights:

Here are the main highlights of the recent EIA weekly report on natural gas: last week (11^th of March) the underground natural gas storage (Billion Cubic Feet) reached a total of 1,618 billion cubic feet for all lower 48 states, as it fell for the seventeenth straight week, by 3.3%, or 56 billion cubic feet; this draw, was smaller than last week’s draw (71 billion cubic feet) and nearly equal to the 5-year average draw of 58 BcF.

Natural gas consumption fell in the U.S. during the week ending on March 11th: the average daily consumption in the US decreased by 3.6% compares to the previous week to an average of 69.4 Bcf per day; the main cause for this decline is the warmer weather as reflected in a drop of 7.3% compare to the previous week in residential and commercial sectors’ consumption.

In total, natural gas imports, consumption and storage fell during that week, while natural gas spot price and production rose.

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