Movement in the Henry Hub day-ahead price echoed the widespread increase of market prices in this week’s cash market by rising 7.3 percent, from $2.32 per MMBtu the previous Wednesday to $2.49 per MMBtu yesterday. As the Spot Prices tab on the left shows, the Henry Hub cash price trended upwards nearly every day of the week, except Wednesday, as all end-use natural gas market segments increased their consumption.
At the NYMEX, the March 2012 contract rose from $2.382 per MMBtu last Wednesday to $2.448 per MMBtu yesterday, an increase of 6.6 cents (2.8 percent). The March 2012 contract peaked on Thursday at $2.554 per MMBtu (up 7.2 percent) with the arrival of the colder weather, but began a gradual decline afterwards likely on forecasts for the return of milder temperatures set against a backdrop of ample national storage lingering into spring.
All downstream trading locations responded with higher prices from increased 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 $2.70 per MMBtu , showed a $0.21 per MMBtu price gain over the week (Wednesday to Wednesday) to close at $2.91 per MMBtu (up 7.8 percent). Over the same period, and experiencing similar weather patterns, the Chicago citygate spot price registered a smaller 17 cent per MMBtu price gain (from $2.43 per MMBtu last Wednesday), ending the week at $2.60 per MMBtu (up 7.0 percent).
In the midst of more normal seasonal temperatures, consumption posted an expected increase for the week. According to estimates from Bentek, domestic natural gas consumption rose by 4.8 percent from last week. The residential/commercial sector led the increase with an 8.5 percent gain, while the industrial sector tallied a 1.6 percent rise. The power sector posted a 1.9 percent increase, confirming the increased weather load.
Total supply was down slightly for the week with a decline in dry gas production. According to Bentek estimates, the week’s average total natural gas supply posted a 0.3 percent decline from last week’s level led by a small decrease in dry gas production. Domestic weekly dry gas production averaged 64.0 Bcf per day, 0.4 percent lower than the previous week and 19.5 percent above this time last year. The slight loss in this week’s dry gas production was partially offset by a 0.6 percent increase in imports from Canada, which averaged 5.5 Bcf per day over the period. Imports from Canada stand 29.5 percent below year-ago volumes for the same week. There were also modest supply losses registered in the liquefied natural gas (LNG) arena during the week, where imports averaged 571 MMcf/d, remaining 49.4 percent below year-ago levels.