At the NYMEX, the price response of the September 2011 contract diverged from the cash market over the week and decreased 1.1 cents (0.2 percent) from $3.933 per MMBtu last Wednesday to $3.922 per MMBtu yesterday. The contract surged 10.4 cents late in the day on Tuesday, likely over speculation as to the number of nuclear generating plants the East Coast earthquake may have removed from service along with pipeline outages. When news became clear on Wednesday about minimal infrastructure impacts, and with the looming threat of approaching Hurricane Irene possibly bring cooling rains and power outages to the East Coast thwarting natural gas consumption, this expiring contract (expires Monday, 8/29/2011) quickly gave back most of the prior day gain. To provide a longer-term perspective, this futures contract began life at $6.333 per MMBtu (11/29/2005) and posted a life-of-contract high price of $10.510 per MMBtu (7/1/2008) before closing yesterday below $4 per MMBtu.
The Henry Hub price echoed the week’s general cash market price increase by rising 3.2 percent from $3.97 per MMBtu the previous Wednesday to $4.10 per MMBtu yesterday on forecasts of returning cooling load to some areas. As the accompanying table shows, the Henry Hub cash price meandered in a narrow range most of the week before surging 13 cents the last two days following the earthquake and prospects for returning near-term cooling load.
End-market natural gas prices generally followed the lead of their wholesale counterparts and responded to moderating temperatures along the East Coast early in the week with a lack of direction until prospects of some returning cooling load reemerged. The New York citygate, which started the week at $4.20 per MMBtu showed a 3 cent price range until starting upward on Monday. The New York citygate increased by $0.15 per MMBtu over the period (Wednesday to Wednesday) to close at $4.35 per MMBtu (up 3.6 percent). During the same period, the Chicago citygate rose $0.14 per MMBtu and ended the week at $4.17 per MMBtu (up 3.5 percent).
Despite a respite to more normal seasonal temperatures over the weekend, consumption registered a modest increase for the week. According to estimates from BENTEK Energy Services, LLC, domestic gas consumption increased this week by 4.3 percent over last week. The power sector led the increase with a gain of 10.0 percent, mostly reflective of regions in Texas which remain in the grip of a summer heat wave. However, the weather factor was partially offset by the residential/commercial sector which posted a decrease in consumption. Likewise, the industrial sector also posted a small 0.2 percent consumption decline.