Natural gas prices outlook – 26 April

Henry Hub spot price started off the week with moderate rises, while the future price (May delivery) started with moderate falls. Will the natural gas rally continue for the remainder of the month?

Let’s examine the natural gas market for today, April 26th:

Natural gas prices April 2011 – update

The weather forecasts predict there will be a severe thunder storms accompanied with rainfalls in parts of the South and Midwest. There is chance of showers and thunder storms in the entire region of the Northeast as well. The Northeast region is among the biggest consumer of natural gas in the U.S.; temperatures are predicted to reach 50s to 70s in the Northeast.

The natural gas prices seem to have made a “u turn” during the month as they have started off the month with falls up to the middle of the month, and since April 12th the Henry Hub spot and future prices made a comeback and erased the falls they had earlier this month.


Natural gas spot price future (Henry Hub) April 26 2011

During April 2011, up to April 25th, Henry Hub spot and future prices inclined by 0.93% and 0.64%, respectively.

This price hike might have something to do with the following factors:

  1. The winter like temperatures in parts of the US, mainly in the Northeast;
  2. The rise in imports in last week as presented by the recent EIA natural gas report – this means the natural gas paid for isn’t local but imported and caused more;
  3. The rise in crude oil prices that causes an increase in demand for natural gas as a substitute energy source;
  4. And finally, the incline in demand for natural gas aboard including Japan.

These factors might show part of reasons for the recent comeback in natural gas prices.

Future and spot prices

The contango (the premium of Henry Hub future over spot prices) reached yesterday, April 25th 0.03$/MMbtu. As we are exiting the winter and there are expectations that during May natural gas demand will diminish, the current contango may switch back to backwardation by the end of the month.


Contango  Backwardation Natural gas (Henry Hub) Future-Spot  26 April  2011

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.

Current Natural gas price

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

The Nymex Henry Hub natural gas price, short term futures (May 2011 delivery) is traded at 4.38 USD / MMbtu, a 0.01 USD decrease or  0.25%, as of 14.49*.

(* GMT)

Natural gas spot price Outlook:

I speculate that natural gas spot price will slow down from its recent incline in the last couple of weeks and will continue to increase but very moderately, while the short term future prices will halt there incline and moderately fall as we are existing the winter and the time of expiry is getting closer.


For further reading (on this site):