Movement in the Henry Hub day-ahead price reflected the increase of most other trading locations in this week’s cash market by rising just under 2 percent from $3.58 per MMBtu the previous Wednesday to $3.65 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price progressed steadily upwards starting last Friday as end-use markets responded to prospects of approaching chillier weather late this week.
At the NYMEX, the November 2011 contract rose 0.4 cents (0.1 percent) from $3.586 per MMBtu last Wednesday to $3.590 per MMBtu yesterday. Despite the weekly rise, the November 2011 contract, which expires today, dropped 6.8 cents yesterday as the December 2011 contract dropped 7.7 cents, likely reflecting uncertainty over anticipated storage builds today rather than immediate weather concerns.
Most trading locations responded with higher prices to prospects of chillier temperatures later this week. Spot prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City, which started the week at $3.83 per MMBtu, showed a 17 cent price gain per MMBtu over the period (Wednesday to Wednesday) to close at $4.00 per MMBtu (up 4.4 percent). Ironically, over the same period, the Chicago citygate spot price increased an identical $0.17 per MMBtu and also ended the week at $4.00 per MMBtu (up 4.4 percent).
In spite of generally mild fall temperatures prior to the arrival of the expected chillier weather, consumption posted a modest increase for the week. According to estimates from BENTEK Energy Services, LLC (BENTEK), domestic gas consumption increased by 3.0 percent over last week. The residential/commercial sector registered a double-digit percent increase while the industrial sector tallied a 1.8 percent increase. However, the power sector posted a generally offsetting 9.0 percent drop reflecting the light weather load at the end of last week.
In the midst of the week’s recovering consumption pattern and price turnaround, overall supply was off slightly. According to BENTEK estimates, the week’s overall average total nominal gas supply posted a 0.6 percent decrease from last week’s level. Domestic weekly dry gas production averaged 62.6 Bcf per day, 0.3 percent lower than the previous week. Domestic dry gas production now stands 7.3 percent above this time last year. The slight fall in this week’s dry gas production was amplified by a 6.0 percent decrease in Canadian imports which averaged 5.4 Bcf per day over the period. Canadian imports stand level with year-ago volumes for the same week. There were modest supply gains registered in the liquefied natural gas (LNG) arena during the week where imports came in at 767 million cubic feet (MMcf) per day but remain 10.0 percent below year-ago levels.