Prevailing natural gas prices resumed their decline during the week except for a brief reversal around the end of last week when a brief cold snap passed. The New York citygate was reflective of pricing points showing an overall loss for the week falling from a level of $5.48 per MMBtu last Wednesday to $4.87 per MMBtu yesterday. However, during the week, the New York citygate price jumped $0.47 per MMBtu when a cold snap passed, hitting a peak of $5.95 per MMBtu on Thursday before giving back $1.08 of the gain this week. The Chicago citygate was also representative of the general weekly trend and dropped from $4.41 per MMBtu the previous Wednesday to $4.40 per MMBtu yesterday.
At the NYMEX, the price of the May 2011 contract decreased 5.7 cents (1.3 percent) over the week from $4.412 per MMBtu to $4.355 per MMBtu after peaking on Friday. The NYMEX price has declined in 2 of the past 3 trading sessions.
The Henry Hub price followed the general direction of the NYMEX, but was much more muted, rising 1.7 percent from $4.18 per MMBtu and ending the week slightly up at $4.25 per MMBtu. The Henry Hub price has resumed its general decline since peaking on Monday.
An overall increase in natural gas consumption, primarily due to colder temperatures during the week, was likely the prime catalyst causing the price spike and briefly stemming the general trend in softening natural gas prices. According to estimates from BENTEK Energy Services, LLC, domestic consumption this week increased by a robust 23.2 percent from the previous week. A large jump in the residential/commercial sector of 41.1 percent led the increase, followed by gains of 14.9 percent and 5.0 percent, respectively, in the power and industrial sectors.
According to BENTEK estimates, the week’s average 68.1 Bcf per day of total nominal gas supply represented an increase of 2.0 percent from last week’s value. Domestic gas production was 63.8 Bcf, up 0.9 percent, accounting for the bulk of the increase. BENTEK notes that more new daily production records were set during the week. Canadian imports averaged about 6.3 Bcf per day, representing an increase of about 1 Bcf per day (14.9 percent) for the week, and now stand 3.2 percent above year-ago levels likely due to increasing productivity of new wells in Canada. Supply also picked up slightly in the liquefied natural gas (LNG) arena, where imports (less than 1 Bcf per day) increased 2.4 percent above last week but remain 27.3 percent below the corresponding week last year.