Prices for natural gas for contract months between May 2012 and April 2013 have fallen significantly over the past year. At the end of April 2011, prices for May 2012 (now the near-month contract) were trading close to $5.00 per million British thermal units (MMBtu), but are currently near $2.00 per MMBtu. In the last month, the 12-month futures prices have fallen about 30 cents across the board. While prices have risen in the past few days, they still are well below their levels of one month ago.
The continued low prices are the result of a relatively warm winter and abundant production and storage. While the near-month contract recently rose above $2.00 per MMBtu, earlier this month, near-month contract prices hit 10-year lows. The increase in prices for contract months beginning in the fall of 2013 reflects anticipated higher demand for the winter heating season.
The Henry Hub day-ahead price remained below $2.00 per MMBtu for the entire week, dropping to $1.82 per MMBtu on Friday before rising steadily to close the week yesterday at $1.99 per MMBtu. Prices at Henry Hub settled in a 17-cent range, from Friday’s low to yesterday’s high. While many spot market pricing points across the Northeast and Midwest also dipped below $2.00 per MMBtu over the course of the week, most closed the week above that mark.
At the NYMEX, the May 2012 contract rose from $1.951 per MMBtu last Wednesday to $2.068 per MMBtu yesterday, an increase of 11.7 cents (6.0 percent). Prices over the course of the week exhibited some movement, dipping to a low of $1.907 on Thursday. The contract stayed under the $2.000 per MMBtu threshold for four of six days, but finished yesterday nearly 7 cents over that mark. The 12-Month Strip (average of May 2012 to April 2013 contracts) closed yesterday at $2.695 per MMBtu, up 8.3 cents per MMBtu (3.2 percent) for the week.
Prices at many downstream trading locations generally followed the Henry Hub pattern, dropping on Thursday and Friday before rebounding, typically closing higher by the reporting week’s end. For example, spot prices at the Algonquin Citygate trading point for delivery into Boston, which started the week at $2.11 per MMBtu, fell to $2.01 per MMBtu on Friday and then rose for the much of the remainder of the period to close yesterday at $2.26 per MMBtu (up 7.1 percent for the week). Similarly, prices at the Transcontinental Pipeline’s Zone 6 trading point (which serves New York City markets) declined from $2.02 per MMBtu last Wednesday to $1.96 per MMBtu on Friday, then climbed to $2.18 per MMBtu by week’s end (up 7.9 percent).