Natural gas spot price (Henry Hub) continue to zigzag as it fell yesterday by 0.95%, while Mat future prices decreased by 1.89%. As a result the backwardation reached 0.03$/Mmbtu. Will this downwards trend of natural gas prices continue?
Let’s examine the natural gas market for April 7th:
Natural gas prices April 2011 – update
The weather forecasts predict shower and thunder storms in the Midwest, which might raise a bit the consumption of natural gas; showers are also expected to be in the Northeast, even though the temperatures there are predicted to reach 40s to 50s in central and northern Pennsylvania, New York and New England and elsewhere in the Northeast temperatures expected to be in the 60s and 70s.
This news might pressure natural gas spot price to increase as the day will progress, but at a very moderate rate if at all.
Future and spot prices
The backwardation (the spread of spot prices of Henry Hub over the natural gas future price) reached yesterday, April 6th 0.03$/MMbtu. As we are exiting the winter and there are expectations that during May natural gas demand will continue to fall, the backwardation might continue to rise during the month.
During April 2011, up to April 6th, Henry Hub spot and future prices rose by 3.2% and 4.8%, respectively.
EIA Natural gas storage review
The EIA is expected to publish later on today its weekly report on natural gas storage, production and consumption for last week.
According to the previous report, the underground natural gas storage (Billion Cubic Feet) rose for the first time this year with a 12 billion cubic feet injection as it reached 1,624 billion cubic feet for all lower 48 states; the stocks are 68 Bcf above the 5-year average.
In total, natural gas imports, storage, consumption and production rose during the week ending on March 25th.
Current Natural gas price
US commodities market currently shows falls in natural gas future price:
The Nymex Henry Hub natural gas price, short term futures (April 2011 delivery) is traded at 4.07 USD / MMbtu, a 0.08 USD decrease or 1.91%, as of 16.48*.
Natural gas spot price Outlook:
I still speculate that natural gas spot prices will continue to show a downward trend as the week will progress; the backwardation will continue to rise as natural gas future prices will under perform spot prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13.30 – Department of Labor report – US unemployment claims
13.30 – ECB president’s speech
15.30 – EIA report about Natural gas storage
12.00PM – Canada unemployment rate report
For further reading (on this site):
- Natural gas prices outlook for April 2011
- Weekly outlook for April 4-8
- Natural gas prices leveled out during the week –28/3-1/4