The extreme cold weather mainly in the Northeast of the States has subsided and despite the ongoing cold weather in many parts of the US, the consumption for natural gas has declined and consequentially the prices also declined. As traders look ahead for the upcoming month of March, their expectations are for consumption of natural gas to further drop along with natural gas prices.
In a nutshell, New York City Gate spot price, along with natural gas spot price Henry Hub and its future price fell during recent week.
Let’s check out the main figures for this passing week of 14th to 18th of February:
Natural gas spot price – Review and Analysis
Natural gas spot price (Henry Hub) reached 3.85$/mmbtu at the end of the week – a 1.03% decline from beginning to end of the week. On average, it fell by 0.56% on a daily basis, and the average weekly price was 6.6% below the average weekly price in the previous week. This small fall during the week shows that the big fall came at the beginning of the week compare to last week.
The Nymex Henry Hub Future Price (March delivery) also declined last week by 1.27% from beginning to end of the week; and its average price was 2.3% lower than last week’s average price.
Both these prices show the downward trend that was expected to happen during February and as the winter will continue to subside in the US and mainly the extreme cold weather (which is more important in affecting natural gas consumption), the price will continue to decline (for more on the February natural gas prices outlook see here).
The Contango (the spread between the future and spot prices, i.e. future minus spot) for Henry Hub was very steady for most of the week as it settled at the end of the week on 0.03$/mmbtu – the smallest spread this month. Nonetheless, the Contango is very small and might still indicate the market is expecting the price of natural gas to decline next month.
This passing week’s average NY gate natural gas spot price fell by 37.2% compare to last week’s average price, and its price fell by 6.32% from beginning to end of the week. If New York won’t experience any further snow storms this winter, we will probably continue seeing a downward trend in this commodity’s price.
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.
Here are the main highlights of the recent EIA weekly report on natural gas: in my last review on U.S. natural gas storage, there was a drop of in underground natural gas storage (Billion Cubic Feet); according to the recent report for the week of 11th of February, the natural gas storage continued to decline for the thirtieth straight week, this time by 10.9%, a fall of over 233 billion cubic feet; this draw is much larger than the 5-year average draw of 150 BcF; furthermore, the natural gas storage is also lower than the five year average by 6.3% BcF.
As the extreme cold weather subsided there was a fall in natural gas consumption in many regions in the U.S.: the average daily consumption in the US dropped by 17.1% compare to the previous week, reaching 82.1 Bcf; combined consumption for both residential and industrial sectors declined by 23.2% reaching 40.2 Bcf per day.
In total, natural gas storage, consumption and production declined. The prices showed some resistance but in total fell.
For further reading (in this site):
- Natural gas consumption declines despite cold weather | EIA review, Feb 18
- Natural gas prices outlook for February 2011
- Natural gas prices outlook– 17 February
Previous issues of weekly report: