At the NYMEX, the price of the June 2011 contract increased a token 1.7 cents (0.4 percent) over the week from $4.181 per MMBtu last Wednesday to $4.198 per MMBtu yesterday despite peaking on Monday, likely over concerns of possible production curtailments arising from lower Mississippi River area flooding. The NYMEX price rose in 4 of the past 5 trading sessions and is apparently now focusing on hopes of warmer weather next week and reversing the decline in recent consumption levels.
The Henry Hub price reflected the general weekly price downtrend in a slightly oversupplied market, easing 1.9 percent from $4.23 per MMBtu last week to close at $4.15 per MMBtu yesterday. Ironically, the Henry Hub, much closer to the actual flood danger, showed a greater loss for the week than the NYMEX, thousands of miles away from the danger, which posted a token gain.
Prevailing downstream natural gas prices followed the lead of their wholesale counterparts and generally eased accordingly. The New York citygate was reflective of most pricing points showing an overall reduction for the week, losing 2 cents per MMBtu to close at $4.44 per MMBtu yesterday. The Chicago citygate ended the week unchanged at $4.27 per MMBtu, but did show a $0.19 per MMBtu spike on Monday with the flood threat news.
Aside from the flooding concern, overall moderating natural gas consumption due to light weather load (both heating and cooling), was likely the chief catalyst contributing to price softness during the week. According to estimates from BENTEK Energy Services, LLC, domestic gas consumption decreased this week by 0.8 percent from last week. The residential/commercial sector had the only gain in consumption, but with only a slight increase in weather load. This increase was largely offset by a of 7.7 percent drop in the power sector combined with a 0.7 percent decrease in the industrial sector.
According to BENTEK estimates, the week’s average total nominal gas supply posted a decrease of 0.1 percent from last week’s value. Domestic weekly gas production averaged 63.9 Bcf per day, down 0.3 percent for the week. However, production was above 64 Bcf per day for 3 of the past 7 days and remains 5.9 percent above this time last year. The week’s slight easing in production was combined with a 4.9 percent drop in Canadian imports, which averaged just above 5.3 Bcf per day. This import level represents still another decline from the previous week, and now stands 19.0 percent below year-ago levels. Supply picked up slightly in the liquefied natural gas (LNG) arena, where imports increased to almost 1.0 Bcf per day due to increased send out from Golden Pass, but remain 15.1 percent below year-ago levels.