Prices decrease in most of the country. Natural gas prices decreased in most of the United States, with weather warming from the cold temperatures at the beginning of the report week. The average temperature in the Lower 48 states rose from 32 degrees Fahrenheit on Thursday, December 12, to 40 degrees yesterday, with demand for electric consumption (power burn) and residential and commercial heating both decreasing as a result. As this occurred, supply recovered partially from the reduced production levels last week caused by well freeze-offs. As demand declined and supply partially recovered, the Henry Hub spot price in Erath, Louisiana, went from $4.40/MMBtu on Thursday, December 12, to $4.26/MMBtu yesterday, but was still up slightly by 2 cents MMBtu over the $4.24/MMBtu price on Wednesday, December 11.
The largest price decline took place in New York City as the Transco Zone 6-NY spot price fell from $16.54/MMBtu on Wednesday, December 11, to $4.39/MMBtu yesterday. New York prices spiked last week as cold temperatures drove up demand. This was compounded by reduced deliveries into the area on the Texas Eastern Transmission Company (Tetco) pipeline, following two interruptions to service in the southwestern portion of the Appalachian Basin’s Marcellus Shale play. Both interruptions took place in southwest Pennsylvania, which forms part of an integrated production region with West Virginia. The first of the two interruptions was an unplanned outage at a Tetco compressor station on December 10, followed by reduced deliveries onto Tetco from the Dominion Transmission (DTI) pipeline on December 11 because of unplanned maintenance at the Oakford Appalachian Gateway metering station. Prices also fell at Boston’s Algonquin Citygate hub, which began the report week on December 11 at $20.40/MMBtu and decreased to $12.59/MMBtu yesterday, although this was still significantly higher than at any other major hub. The Algonquin spot price spiked at $33.14/MMBtu on Friday, December 13, its highest level since January 2013. While new pipeline infrastructure has primarily alleviated the impact of pipeline constraints on New York area markets, the impact of New England constraints remains a significant factor in keeping prices high there.
Natural gas futures price declines 8.6 cents/MMBtu over the week. The near-month (January 2014) futures price began the report week at $4.337/MMBtu and ended at $4.251/MMBtu, its first weekly decline since the beginning of November. The 12-month strip (the average of the 12 contracts between January 2014 and December 2014) decreased by 5.4 cents to $4.192/MMBtu yesterday.