At the NYMEX, the price of the August 2011 contract reflected one of the strongest price responses relative to gas pricing points and increased 18.6 cents (4.4 percent) over the week from $4.217 per MMBtu last Wednesday to $4.403 per MMBtu yesterday. Since last Thursday, expectations of higher temperatures with rising cooling load has likely been the chief catalyst propelling futures to a string of four consecutive days of price gains accounting for the bulk of the week’s price increase.
The Henry Hub price echoed the week’s general price rise by increasing 2.0 percent from $4.34 per MMBtu during the week to close at $4.43 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price began its ascent on Friday with four straight days of price gains totaling 24 cents during the midst of the heat build.
End-market natural gas prices generally followed the lead of their wholesale counterparts and responded to the heat, but with more muted gains. The New York citygate temporarily spiked up 83 cents (18.4 percent) between Friday and Monday when the heat wave first materialized. However, the Northeast heat spike proved to be short-lived and prices started retreating beginning on Tuesday. Despite the temporary price spike, the New York citygate actually decreased by $0.04 per MMBtu over the week (Wednesday to Wednesday) to close at $4.76 per MMBtu. Correspondingly, during the same time period, the Chicago citygate increased a more mundane $0.12 per MMBtu and ended the week at $4.49 per MMBtu (up 2.2 percent).
Spurred by the heat wave, consumption registered a sound increase. According to estimates from BENTEK Energy Services, LLC, domestic gas consumption increased this week by 5.1 percent over last week. The power sector led the increase on an absolute and percentage basis for a gain of 8.5 percent. Likewise, the residential/commercial sector also registered a gain. However, running counter to the consumption uptrend, the industrial sector fell 1.1 percent.
Amid the generally ascending price environment, overall supply was mixed and down slightly. According to BENTEK Energy estimates, the week’s average total nominal gas supply posted a 0.3 percent decrease from last week’s level. Domestic weekly gas production averaged slightly over 64 Bcf per day, down 0.4 percent from the previous week. Production held above 64 Bcf per day on all but two days of the week. Domestic production now stands 5.3 percent above this time last year. The week’s slight production drop was offset somewhat by a 1.1 percent increase in Canadian imports averaging 6.5 Bcf per day. Canadian imports remain 11.1 percent below year-ago volumes. Supply again abated for liquefied natural gas (LNG) where imports slid to just under 0.4 Bcf per day during the week, and remain 62.8 percent below year-ago levels.