- Higher-than-average seasonal temperatures, coupled with continued high storage levels and consistent production, put downward pressure on natural gas prices again this week. The Henry Hub price closed at $2.81 per MMBtu on January 11, down 15 cents for the week.
- At the New York Mercantile Exchange (NYMEX), the February 2012 natural gas contract slid 32.2 cents per MMBtu for the week to close at $2.774 per MMBtu, a life-of-contract low.
- Working natural gas in storage eased slightly last week to 3,377 Bcf as of Friday, January 6, according to the U.S. Energy Information Administration's (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 95 Bcf, positioning storage volumes 398 Bcf above year-ago levels.
- The natural gas rotary rig count, as reported January 6 by Baker Hughes Incorporated, increased by 2 to 811 active units. Meanwhile, oil-directed rigs decreased by 2 to 1,191 units.
Movement in the Henry Hub day-ahead price reflected the widespread decline of market prices in this week's cash market by falling 5.1 percent, from $2.96 per MMBtu the previous Wednesday to $2.81 per MMBtu yesterday. As the Spot Prices tab on the left shows, the Henry Hub cash price trended downward as end-use gas markets reduced their weekly consumption.
At the NYMEX, the February 2012 contract fell every day except Friday, from $3.096 per MMBtu last Wednesday to $2.774 per MMBtu yesterday, a drop of 32.2 cents (10.4 percent). Over the same period, the March 2012 natural gas futures contract dropped slightly more, by 32.4 cents per MMBtu, and now stands only 2.9 cents above the February contract, reflecting the effects of continued high natural gas storage levels, strong production, and a mild winter so far this season.
All downstream trading locations responded with lower prices from reduced weather load this week. Spot prices at Transcontinental Pipeline's Zone 6 trading point for delivery into New York City, which started the week at $4.55 per MMBtu in anticipation of a passing cold snap, showed a $1.38 per MMBtu price loss over the week (Wednesday to Wednesday) to close at $3.17 per MMBtu (down 30.3 percent). Over the same period, but experiencing different timing of weather patterns, the Chicago citygate spot price registered a smaller 10 cent per MMBtu price loss (from $3.05 per MMBtu last Wednesday), ending the week at $2.95 per MMBtu (down 3.3 percent).