The natural gas market experienced several shifts during July as the U.S. natural gas prices (Henry Hub) started strong during the first half of July, but by the second half they had declined. By the end of July the Henry Hub fell below its initial starting price from the beginning of the month. Let’s examine the changes in the natural gas prices during July 2011 and provide an outlook for natural gas prices for August 2011:
Natural gas prices July 2011- analysis
Let’s first examine how did natural gas prices (Henry Hub) shifted directions during July: the Henry Hub natural gas spot and future prices demonstrated for most of the first half of July an upward trend, which is similar to the upward trend of other energy commodities prices including crude oil prices; during the second half of July the Henry Hub natural gas spot and future prices (short term August delivery) came down and ended the month with Henry Hub spot price moderately declining by 0.47% and the Henry Hub future price decreasing by 5.35%.
Let’s divide July into three parts: from 30/6 to 7/7, from 7/7 to 20/7 and from 20/7 to 31/7; as presented in the table below during the first part of July the Henry Hub spot price nearly didn’t change, while the future price (short term) declined by 5.51%; during the second part of the month, the Henry Hub spot and future prices rose sharply by 9.18% and 8.88%, respectively; during the last part of July, the Henry Hub spot and future prices fell sharply by a similar rate they had rose during the second part. The table below summarizes these findings:
The following table shows the average natural gas spot price, future price of Henry Hub (August delivery) and New York City Gate Spot price. During July, the average Henry Hub spot price fell by 2.5% compared with June’s average price. Future prices of Henry Hub (August delivery) also declined by 3.7%.
Thus, the decline of natural gas prices in the U.S. mainly during the last week and half of July coincided with the decline in average prices during July compared with June’s.
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.