Natural gas spot price fell but future rose – Weekly recap 21-25 February

The month of February is nearly behind us, and winter conditions including extreme cold weather such as snow storms subside as we progress into March. As a result, there is a decline in consumption causing a drop in natural gas spot price during last week.  Notice, however, a shift in Nymex Henry Hub Future price as it started off the month of February below the spot price (Backwardation) and now it’s higher than the Henry Hub spot price (Contango). This might indicate that the market expects for a rise next month in natural gas spot price.

In a nutshell, New York City Gate spot price, along with natural gas spot price Henry Hub fell, and Henry Hub future price rose during last week.

Let’s check out the main figures for this passing week of 21st to 25th of February:

 

Natural gas spot price – Review and Analysis

 

 

table natural gas spot price - 21-25 February

* 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

Natural gas spot price (Henry Hub) moderately declined from beginning to end of the week by 1.04% and reached 3.8$/mmbtu at the end of the week. On average, it fell by 0.2% on a daily basis, and the average weekly price was 1.5% below the average weekly price in the previous week. This small fall during the week shows that the price didn’t change much compare to the previous week.

The Nymex Henry Hub Future Price (March delivery) on the other hand inclined last week by 1.57% from beginning to end of the week; however its average price was 0.1% lower than last week’s average price.

The Contango (the spread between the future and spot prices, i.e. future minus spot) for Henry Hub continue to rise during the week as it settled at the end of the week on 0.21$/mmbtu – the highest spread this month.

These figures show that spot price continues to fall, while future price shows some resistance and inclined during the week. As the cold weather subsides, we will probably continue seeing a drop in natural gas consumption, however the recent rise in natural gas future price, might indicate that the market expects a rise in natural gas spot price next month – March. If this is true, it will most likely be from the supply side; the recent fall in production due to maintenance and repairs after the recent storms, might come short in supplying gas especially since the natural gas storage continues to rapidly fall.

 

This passing week’s average NY gate natural gas spot price rose by 1.2% compare to last week’s average price; however its price fell by 3.95% 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:

 

natural gas price chart - 21-25  February

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 price chart - percent change 21-25  February

Natural gas storage, consumption and production – highlights:

Here are the main highlights of the recent EIA weekly report on natural gas: last week (of 18th of February) there was a drop in underground natural gas storage (Billion Cubic Feet) for the fourteenth straight week, this time by 4.2%, a decline of 81 billion cubic feet; this draw, however, was much smaller than last week’s draw (233 billion cubic feet) and the 5-year average draw of 148 BcF; furthermore, the natural gas storage was lower than the five year average by 61 BcF.

The extreme cold weather continues to subside in the U.S., causing a fall in natural gas consumption in many regions in the U.S.: the average daily consumption in the US dropped by 8% compare to the previous week; the main cause for this due to the decline in power consumption combined consumption by 22.3% for the week of February 18th, compare to the previous week.

In total, there is was a fall all across the boarder for natural gas storage, consumption production and prices.

 

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