Natural gas prices continued to fall during the week – 9-13 May

Natural gas spot prices (Henry Hub) kept on falling on a weekly scale, but much more moderately than a week earlier. Some of the declines might be attributed to the fluctuations in the US dollar compared to major currencies as these changes affected other commodities prices including gold and crude oil.

During May (up to date), there was some linear correlation among the daily percent changes of natural gas (Henry Hub) prices (spot and future), EURO/USD and USD/YEN. As the month will continue, it will be interesting to see if these correlations will hold ground or are just merely statistical correlations.


Correlation natural gas prices 2011 and major currencies Dec 2010- MAY 2011 14 MAY

In regards to the USD/YEN, there might be some merit to this correlation, because ever since the tsunami attack on Japan back in mid March 2011, Japan needed to increase its import of energy commodities including natural gas. Therefore, this high correlation might indicate the effect of these excess imports on the natural gas prices.

Let’s review the main changes in natural gas prices for the week ending on May 13th:

Natural gas prices 2011 May – Review and Analysis


table natural gas spot price Henry Hub -  9-13 MAY 2011

Natural gas spot price (Henry Hub) declined during the week by 4.21% and reached by Friday 4.1$/mmbtu; its average daily change was -0.65%, and its weekly average was 7.24% below the previous week’s average price.

The Nymex Henry Hub Future Price (June delivery) on the other hand inclined by 2.31% during the week, but its average price was 6.31% 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) fluctuated during the week between contango and Backwardation, but by the end of the week it reached 0.15$/mmbtu, i.e. Contango.

Natural gas prices chart

The following chart shows the daily changes of natural gas prices 2011 (Henry Hub) and futures prices (Nymex Henry Hub) in $/mmbtu during the week of May 9-13.

natural gas price Henry Hub chart -  9-13 MAY 2011 The chart shows the downward trend of spot price and the very moderate upward trend of future price.


natural gas SPOT price chart - percent change Henry Hub  9-13 MAY 2011

The second chart presents the daily percent changes of natural gas prices (Henry Hub) and Nymex Henry Hub, (the changes around the weekly trend) and the high volatility of both prices during week.

Natural gas storage, consumption and production – highlights:

Here are the main highlights of the recent EIA weekly report on natural gas and regarding the week ending on May 6th: The underground natural gas storage (Billion Cubic Feet) increased for the fifth straight week, last week by 4.0%; this was a 70 Bcf injection, as the total storage rose to 1,827 billion cubic feet for all lower 48 states; the natural gas storage was 2% below the 5-year average, and 12% below the storage level during the same week in 2010.


natural gas prices chart 2011 (Henry Hub Natural Gas storage 2011 MAY 6

In total, natural gas production and storage rose, while consumption and imports fell during the week ending on May 6th.


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