Natural gas prices outlook – 9 May

The shift in natural gas prices’ direction last week as they fell sharply after increases during the second half of April, might be a short term occurrence. The Henry Hub, much like all other major commodities, was affected by the strengthening of the US dollar that weakened major commodities’ prices. Let’s see what is up ahead for natural gas prices during this week updated to today, May 9th:

Natural gas prices May 2011 – update

The weather forecasts predict winter like weather in the west of the US with cooler than average temperatures. In the Northeast there maybe a few showers but the regions will experience seasonal temperatures.

The natural gas prices seem to have made a “u turn” at the beginning of the month of May: following the rise in natural gas prices during the second half of April, natural gas prices shifted direction again and started off May with 6% falls for Henry Hub spot price and 9.75% for future prices.


Natural gas spot price future (Henry Hub) April - May 2011 MAY 9

Future and spot prices

The contango (the premium of Henry Hub future over spot prices) reached on Friday, May 6th to nil, i.e. spot prices were equal to the future price. As seen in the chart below, during the last couple of months, natural gas was usually in contango, which might indicate that the market expected natural gas prices to rise in the following months as I have explained in my May outlook report.

During last week, however, there seem to have been a shift as the contango switched to backwardation. If this occurrence will continue, it might indicate that the market thinks that natural gas prices might decline in the following month.

Contango  Backwardation Natural gas (Henry Hub) Future-Spot  April May  2011 MAY 9 News from Middle East

A detailed analysis and review of recent news and events is presented in a oil outlook post I have written in the following link.

Natural gas in the news

Current Natural gas price

Natural gas future price is currently traded at moderate rises in U.S. market:

The Nymex Henry Hub natural gas price, short term futures (June 2011 delivery) is traded at 4.26 USD / MMbtu, a 0.02 USD increase or  0.47%, as of 12.44*.

(* GMT)

Natural gas spot price Outlook:

As I have stated in the May outlook report, natural gas prices will continue to be high for the season. The downfall in natural gas prices was a reaction that occurred in major commodities due to the strengthening of the US dollar.

Current natural gas prices show moderate rises, as do most of the other major commodities’ prices. It will remain to be seen if there will be any additional macro events that will cause to shift the natural gas prices from their upward course they have experienced during April.  I speculate that natural gas spot price will slowly incline during the week.



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