Movement in the Henry Hub day-ahead price reflected the widespread decrease of market prices in this week’s cash market by falling 6.2 percent, from $2.60 per MMBtu the previous Wednesday to $2.44 per MMBtu yesterday. As the Spot Prices tab on the left shows, the Henry Hub cash price peaked last Thursday and then fell every day of the week except yesterday as all end-use natural gas market segments decreased their consumption.
At the NYMEX, the April 2012 contract fell from $2.775 per MMBtu last Wednesday to $2.616 per MMBtu yesterday, a decrease of 15.9 cents (5.7 percent). The April 2012 contract fell 4 of the past 5 trading days on forecasts for milder temperatures in early March against a continuing backdrop of ample storage lingering into spring. The March 2012 contract expired on Monday at $2.446 per MMBtu and generally paralleled the April contract down.
All downstream trading locations responded with lower prices from decreased 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 $2.88 per MMBtu , showed a $0.22 per MMBtu price loss over the week (Wednesday to Wednesday) to close at $2.66 per MMBtu (down 7.6 percent). Over the same period, and experiencing similar weather patterns, the Chicago citygate spot price registered a 19 cent per MMBtu price loss (from $2.69 per MMBtu last Wednesday), ending the week at $2.50 per MMBtu (down 7.1 percent).
In the midst of warmer seasonal temperatures, consumption posted an expected decrease for the week. According to estimates from Bentek, domestic natural gas consumption fell by 1.6 percent from last week. The residential/commercial sector led the decrease with a 2.6 percent loss, while the industrial sector tallied a 0.7 percent loss. The power sector posted a 0.5 percent decrease, as weather load diminished.
Total supply was up moderately for the week with an increase in dry gas production. According to Bentek estimates, the week’s average total natural gas supply posted a 1.0 percent increase from last week’s level led by a small increase in dry gas production. Domestic weekly dry gas production averaged 63.7 Bcf per day, 0.6 percent higher than the previous week and 8.6 percent above this time last year. The slight increase in this week’s dry gas production was augmented by a 5.5 percent increase in imports from Canada, which averaged 5.4 Bcf per day over the period. Imports from Canada stand 1.8 percent below year-ago volumes for the same week. There were partially offsetting downward supply losses of 1.2 percent registered in the liquefied natural gas (LNG) arena during the week, where sendout averaged 598 million cubic feet (MMcf) per day, and remains 37.4 percent below year-ago levels.