Natural gas prices fell across most spot market locations, with the exception of certain Northeast and Marcellus pricing points. Spot prices fell by about 10 to 25 cents per MMBtu across most trading points for the week. Marcellus price points saw large price drops early in the week that had mostly rebounded by yesterday. Tennessee Zone 4 Marcellus increased by 19.2 percent week-on-week, beginning the week at $1.82 per MMBtu last Wednesday, falling to $1.40 per MMBtu on Friday, and jumping back up to conclude the week at $2.17 per MMBtu. Tennessee Zone 5 Line 300, which also serves the Marcellus region, ended the week down 2.1 percent, although it showed a similar pattern, moving from $2.34 per MMBtu last Wednesday, falling to $1.45 per MMBtu on Friday, and landing at $2.29 per MMBtu yesterday. The overall low prices in the Marcellus region are attributed largely to pipeline constraints. The Northeast saw warmer-than-normal weather, pushing the Algonquin Citygate (for delivery into Boston) price up 6.8 percent to finish the week at $4.24 per MMBtu.
The NYMEX September 2012 futures contract fell by 7.5 percent from $3.171 per MMBtu last Wednesday to $2.933 per MMBtu yesterday. The settlement price dropped week-on-week after rising consistently throughout June and July. It fell to a low of $2.877 per MMBtu last Friday, and gained slightly thereafter. The 12-Month Strip (average of August 2012 to July 2013 contracts) fell by 2.9 percent, starting at $3.539 per MMBtu last Wednesday, dipping to $3.296 per MMBtu on Friday, and rebounding to $3.436 per MMBtu yesterday.
Total consumption for the report week showed an overall increase, driven by an uptick in natural gas consumed for power generation. According to Bentek estimates, natural gas consumption in the residential/commercial sectors fell by 1.5 percent, but was more than offset by an increase in consumption in the power and industrial sectors, which grew by 1.0 and 1.5 percent, respectively. Higher demand for electricity due to warmer temperatures in the Northeast outweighed a drop in demand in the Southeast stemming from cooler temperatures.
Supply fell by 0.3 percent week-on-week, driven by lower dry gas production. Bentek estimates a 0.4 percent drop in dry production for the report week, although it is nonetheless 2.2 percent higher than the same week last year. Imports from Canada increased by 1.3 percent, having little impact on the overall supply change. Similarly, liquefied natural gas (LNG) sendout had little effect on the overall change in supply. Despite increasing by 6.5 percent for the report week, LNG accounts for only a small fraction of overall supply and is now 42.3 percent below 2011 levels for the corresponding week.