In this passing week, natural gas spot price hiked as the cold weather settled on the East coast of the U.S. In total, both the Henry Hub future and spot prices hiked, while New York City gate price tripled over the week. I will present the main figures related to the natural gas market in this weekly recap analysis of January 18-21:
Natural gas spot price
The cold weather set its toll on many Americans living on the East coast as such low temperatures haven’t been seen in many places over there in a long time; As a result, the demand for natural gas hiked causing natural gas prices to increase dramatically:
This passing week’s average of NY gate natural gas spot price rose by 22.7% compare to last week’s average price, however this is only part of the picture; the cold weather caused a hike in demand and consequentially the NY city gate natural gas spot price, rose very sharply by over 203% from beginning to the end of the week to reach 16.77$/mmbtu, and its average daily change was 28.18% during the week.
Natural gas spot price (Henry Hub) increased since Wednesday and reached over the weekend to 4.73$/mmbtu – a 4.65% rise from beginning to end of the week. On average, it rose by 1.96% on a daily basis, and the average weekly price is 2.5% higher than the average weekly price in the previous week.
The Nymex Henry Hub Future Price (February delivery) rose by 7% from beginning to end of the week; and its average price was 3.3% higher than last week’s average price.
During the month of January, Henry Hub future price rose by 1.9% while spot price increased by 4.2%; furthermore, currently the contango between spot and future is only 1 cent/mmbtu as the expiry date of the February future price in nearing.
* 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 storage – highlights:
Here are the main highlights of the recent EIA weekly report on natural gas: in my last review about U.S. Natural gas storage showed a drop of 8.2% in underground natural gas storage (Billion Cubic Feet); for the week of 14th of January presented a decline of over 243 billion cubic feet. This withdrawal of natural gas is the sixth highest since 2002, and according to the EIA, is higher than the five year average of 133 BcF.
A suggested reason for the rapid decrease in storage as consumption didn’t rise much could be due to the supply side.
Production didn’t rise in the passing week and the import of Canadian gas declined by 4% compare to previous week. These two factors could explain the sharp fall in storage despite the decline in consumption.
That being said, the working gas storage is still higher by 78 Bcf than last year’s level or the five-year average. The natural gas storage reached a total of 2,716 billion cubic feet for all lower 48 states, which is higher by 109 billion cubic feet for a similar time in 2010.
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 ranging between a 3.5 percent incline for Nymex Henry Hub at the end of the week, and a -1.1 percent decline at the beginning of the week for Henry Hub spot prices.
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