Natural gas prices shifted direction to a rise – Weekly recap 21-25 March

The natural gas market showed some resilience in the past couple of weeks as natural gas prices bounced back after they have declined in the beginning of March. The rise in natural gas is probably related to the ongoing cold weather in the US mainly in the Midwest and Northeast, which reflected in a rise in natural gas consumption (see here below). The Henry Hub future price (April delivery) led the charge with rapid rise followed by natural gas spot price; the week ended with the Henry  Hub Contango reaching 0.27$/mmbtu – the widest spread this week  (see here for more on the recent rise in natural gas prices).

Let’s review the main figures in the natural gas market for this passing week ending on 25th of March:

Natural gas spot and future prices – Review and Analysis

table natural gas spot price - 21-25 of March 2011

Natural gas spot price (Henry Hub) inclined from beginning to end of the week by 3.51% and reached 4.13$/mmbtu on Friday. On average, it rose by 0.77% on a daily basis, and the average weekly price was 6.3% above the average weekly price in the previous week.

The Nymex Henry Hub Future Price (April delivery) also rose last week by 5.74% from beginning to end of the week; and its average price was 6.4% higher than last week’s average price.

The Contango (the spread between the future and spot prices, i.e. future minus spot) for Henry Hub fluctuated throughout the week, but in the end of the week it settled at 0.27$/mmbtu – the highest spread this week.

This ongoing rally in natural gas prices for the past two weeks continues as the speculation around natural gas market is high (see here for more on the speculation around natural gas during March).

During March natural gas spot price (Henry Hub) rose by 5.1%, and future price (April delivery) rose by 13.6%.

Natural gas price chart

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


natural gas price chart - 21-25 of March 2011

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

natural gas price chart - percent change 21-25 of March 2011

Natural gas storage, consumption and production – highlights:

Here are the main highlights of the recent EIA weekly report on natural gas: last week (18th of March) the underground natural gas storage (Billion Cubic Feet) fell for the eighteenth straight week, by 0.4%, or 6 billion cubic feet to reach a total of 1,612 billion cubic feet for all lower 48 states; this draw, was smaller than last week’s draw (56 billion cubic feet) and less than the 5-year average draw of 17 BcF.

Natural gas consumption rose in the U.S. during the week ending on March 18th: the average daily consumption in the US increased by 9.6 Bcf or 6.1% during the week (from Thursday, March 17 to Wednesday, March 23); the rise is reflected in the residential and commercial sectors’ consumption that increased by 11.1 Bcf/d or 15.2% during the week.

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



For further reading (on this site):

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