For the most part, moderate weather across most of the country helped to push prices downward. Power burn rose only slightly during the week, about 0.6 percent, according to estimates from BENTEK Energy Services, LLC. The increase in power burn, however, was offset by large declines in residential and commercial consumption, leading to an overall decline in consumption of about 3.3 percent. The Henry Hub spot price fell from $3.63 per MMBtu last Wednesday to $3.54 per MMBtu yesterday.
Though still posting net declines for the week, pricing points in California posted relatively large intraweek increases, as prices rallied during the back end of the report week. The relative price strength is likely due to the heat in Southern California; after falling from higher prices at the beginning of the report week, the Southern California Border Average price rose from $3.19 per MMBtu on Friday to $3.52 per MMBtu on Wednesday. Strength in demand in this region also is likely providing support for Rockies prices. Exports to Mexico fell during the week, by about 18 percent, possibly the result of increasing competition with supplies serving the California and Southwest markets.
Northeast prices also fell, and moderate weather and upcoming storage shut-ins could put more downward pressure on prices. The price at Transcontinental’s Zone 6 point for delivery into New York fell on the week from $3.87 per MMBtu to $3.79 per MMBtu. Imports to the Northeast from Canada stayed mainly flat, rising about 0.1 percent. Several storage facilities in the Northeast have scheduled shut ins for the second half of October which could lead to more downward pressure on spot prices in the region if demand remains moderate in the coming weeks.
Though rising slightly from the previous week, LNG sendout continued to languish. Sendout averaged just a little over 0.5 Bcf per day this week with the vast majority of sendout coming from the Everett terminal in New England and the Elba Island terminal in Georgia. As domestic supply has grown, the need for imports has been reduced substantially. Since 2009, several terminals have begun to re-export LNG cargoes, and, more recently, explore the option to add liquefaction capacity to export domestically produced natural gas. Earlier this month, Dominion Resources asked permission from the U.S. Department of Energy to export domestically produced natural gas from its Cove Point facility in Maryland.
At the New York Mercantile Exchange, the price of the near-month contract (November 2011) fell about 8 cents, from $3.570 per MMBtu last Wednesday to $3.489 per MMBtu yesterday. The price of the 12-month strip also fell, from $4.047 per MMBtu last Wednesday to $3.948 per MMBtu yesterday. All of the contracts in this year’s winter strip (November 2011–March 2012) settled below $4 per MMBtu on Wednesday. On October 12, 2010, the price of the November 2010 near month contract was $3.629 per MMBtu, and the 12-month strip was $4.248 per MMBtu.