Weather-related demand from hot temperatures over the past few days has led imports of natural gas from Canada to jump in the Northeast United States. On Wednesday, imports into the Northeast rose to their highest level since March, according to data from BENTEK Energy LLC (Bentek). Overall tightness in supply from high demand in the Northeast, which also faces pipeline infrastructure constraints, has led prices in New England to rise to above $8 per million British thermal units (MMBtu).
Although rising domestic production has made LNG and pipeline imports from Canada a smaller piece of the domestic supply picture, imports still play an important role, particularly in meeting incremental demand during times of extreme heat or cold. The jump in prices has also likely helped to attract Canadian pipeline gas to the Northeast. According to Bentek, LNG sendout from the Everett Terminal, located close to Boston, has fallen to zero in recent weeks, leaving Canadian gas as one of the few sources of incremental supply.
The NYMEX began the week with all contracts through June 2014 registering double-digit increases on Thursday and remaining at higher levels throughout the balance of the report week (Wednesday to Wednesday). The July 2012 contract led the futures market increase with a 31 cent per MMBtu (14.2 percent) gain last Thursday and finished the week up 33.2 cents per MMBtu (15.2 percent), closing at $2.517 per MMBtu yesterday. The 3-Month Strip (average of July, August, and September contracts) followed suit with a 30 cent jump (13.6 percent) on Thursday and finished the week with a 31.8 cent per MMBtu (14.2 percent) gain to close at $2.552 per MMBtu yesterday. The gain in the 12-Month Strip (average of the July 2012 through June 2013 contracts) showed a similar, although not as strong, pattern, gaining 22 cents per MMBtu (7.8 percent) last Thursday and closing the week up 23.7 cents per MMBtu (8.4 percent) at $3.059 per MMBtu yesterday.
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Movement in the Henry Hub day-ahead price reflected the overall increase in market prices across the country. Starting the week at $2.18 per MMBtu last Wednesday, it lagged the futures market increases by a day, gaining only 2 cents per MMBtu on Thursday. It subsequently jumped 24 cents per MMBtu on Friday, after which it continued to climb steadily, closing the week up 42 cents per MMBtu (19.3 percent) at $2.60 per MMBtu yesterday.