Natural gas prices continued their recent recovery and sharply rose during last week again. This recovery comes after oil prices plummeted last week. There weren’t any sharp turns in the fundamentals of the natural gas market so this rally might not last long. Keep in mind that natural gas storage is still high: According to the recent NG storage report, there was a 28 bcf injection; the current natural gas storage is 49.9% above the 5-year average.
Following the sharp movement in natural gas prices, the gap between future and spot also shifted during the week between Contango and Backwardation; it reached a weekly average of $0.07/mmbtu.
During last week the Henry Hub spot price rose by 9.48% while the future price (June delivery) decreased by 2.56%. During April, natural gas spot price increased by 6.57% and the future price (May delivery) by 9.86%.
Here is a short recap for the changes in natural gas market for the week ending on May 4th 2012:
Natural Gas Prices May – Weekly Recap
The Nymex Henry Hub Future Price (June delivery) declined during last week by 2.56% and reached on Friday $2.28 /mmbtu; its average daily change was 0.89%, and its weekly average price was 11.87% above the previous week’s average price.
Natural gas price (Henry Hub spot) sharply rose during last week by 9.48%, and its average price was 12.1% above last week’s average price.
The difference between the natural gas future and spot prices, i.e. future price minus spot price (if the spot are higher than the future its called Backwardation, if future is higher than its called Contango) shifted between Backwardation and Contango during the week; by the end of the week the Backwardation reached $0.03/mmbtu.
Natural Gas Price Charts
The following charts presents natural gas (Henry Hub) and futures prices (Nymex Henry Hub) in $/mmbtu between April 30th and May 4th.
Natural Gas Storage Update – EIA Report:
According to the recent report, the underground natural gas storage (Billion Cubic Feet) rose for the sixth consecutive weeks, last week the storage levels increased by 28 Bcf; the natural gas storage settled at 2,576 billion cubic feet for all lower 48 states; the current natural gas storage is 49.9% above the 5-year average, and is also 48.4% above the storage level during the same week in 2011.
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