The movement in the Henry Hub day-ahead price mirrored the fall of other trading locations in this week’s cash market by slumping 6.4 percent from $3.88 per MMBtu the previous Wednesday to $3.63 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price progressed in an unwavering downward trend every day of the week until yesterday when a modest rally occurred spawned by expectations of increasingly low overnight temperatures.
At the NYMEX, the November 2011 contract decreased 22.9 cents (6.0 percent) from $3.799 per MMBtu last Wednesday to $3.560 per MMBtu yesterday. The contract dropped 18.2 cents from Thursday through Monday on the higher-than-average triple-digit storage build last week, a rebounding gas-directed rig count, and fading weather loads—either cooling or heating.
Most trading locations responded in kind to upstream price signals lamenting lackadaisical weather prospects. Spot prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City which started the week at $4.13 per MMBtu showed a 26 cent price loss per MMBtu over the period (Wednesday to Wednesday) to close at $3.87 per MMBtu (down 6.3 percent). During the same period, the Chicago citygate spot price fell $0.27 per MMBtu and ended the week at $3.64 per MMBtu (down 6.9 percent).
In spite of the mild fall temperatures present over the past week, consumption registered a modest increase for the week. According to estimates from BENTEK Energy Services, LLC (BENTEK), domestic gas consumption increased by 1.2 percent over last week. The residential/commercial sector posted a double-digit percent increase while the industrial sector tallied a 2.2 percent increase. However, the power sector posted a generally offsetting 11.8 percent drop reflecting the light weather load.
In the midst of the week’s anemic consumption pattern and declining price environment, overall supply was also off modestly. According to BENTEK estimates, the week’s overall average total nominal gas supply posted a 0.5 percent decrease from last week’s level. Domestic weekly dry gas production averaged 62.5 Bcf per day, 0.7 percent lower than the previous week. Domestic dry gas production now stands 8.7 percent above this time last year. The slight fall in this week’s production was offset somewhat by a 1.7 percent increase in Canadian imports averaging 5.6 Bcf per day. However, Canadian imports remain 5.5 percent below year-ago volumes. Supply gains remained muted in the liquefied natural gas (LNG) arena during the week where imports came in at 476 million cubic feet (MMcf) per day and remain 34.2 percent below year-ago levels.