Natural gas prices generally registered overall increases for the report week (Wednesday to Wednesday) at many of the country’s trading locations. The Henry Hub price, which dropped 12 cents per million British thermal units (MMBtu) on Thursday, rose sharply on Monday and again yesterday to close at $2.87 per MMBtu (up 27 cents for the week).
Tropical Storm Debby Shuts In Gulf of Mexico Production
Offshore oil and natural gas platform operators evacuated rigs and shut in production this week in response to Tropical Storm Debby (later downgraded to a tropical depression). According to the Bureau of Safety and Environmental Enforcement (BSEE), 17.1 percent of natural gas production from the Gulf of Mexico was shut in on Tuesday morning. This amounts to about 773 million cubic feet (MMcf) per day. About 250,000 barrels per day of oil were reported as shut in on Tuesday, about 18.1 percent of Gulf of Mexico crude oil production.
Most shut-ins occurred Sunday and Monday, and when most production had returned to normal on Wednesday, BSEE issued its final update on oil and gas activity. After moving across the Gulf, Debby made landfall in Florida on Tuesday afternoon.
The Henry Hub day-ahead price registered an overall increase for the week, dipping on Thursday before climbing modestly on Friday and then sharply increasing on Monday and Wednesday, closing the week at $2.87 per MMBtu, up 10.4 percent. Shut-in production in the Gulf of Mexico (due to tropical storm Debby) contributed to Monday’s increase. In the northeast, the much hotter-than-normal temperatures (combined with pipeline maintenance and nuclear outages) that helped generate significant price increases early in the reporting week was followed by cooler weather that helped to moderate end-of-week prices.
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At the NYMEX, the July 2012 contract, which expired yesterday, ended the week higher, rising from $2.517 per MMBtu last Wednesday to $2.774 per MMBtu yesterday, an increase of 10.2 percent. Prices rose every day to close 25.7 cents per MMBtu higher, reflecting, in part, an anticipated return to above-normal temperatures for several parts of the nation. The August contract, which moves into the near-month position today, rose from $2.555 per MMBtu last Wednesday to $2.798 per MMBtu yesterday. The 12-Month Strip (average of July 2012 to June 2013 contracts) rose every day of the reporting period before dipping yesterday, closing at $3.207 per MMBtu, up 14.8 cents per MMBtu (4.8 percent) for the week.