Movement in the Henry Hub day-ahead price reflected a widespread rebound in market prices in this week’s cash market by rising 3.8 percent, from $2.13 per MMBtu the previous Wednesday to $2.21 per MMBtu yesterday. As the Spot Prices tab on the left shows, the Henry Hub cash price hit its low last Friday at $2.01 per MMBtu. On the same day, several pricing points dipped below the $2 mark. Prices then rebounded modestly for the rest of the week, potentially driven by storage injection demand.
At the NYMEX, the April 2012 contract rose from $2.284 per MMBtu last Wednesday to $2.360 per MMBtu yesterday, an increase of 7.6 cents (3.3 percent). The April 2012 contract led the turnaround in the futures market following last Thursday’s low. The 3-Month Strip (average of April-May-June contracts) also reflected the price reversal with a 1.9 percent gain for the week.
Nearly all downstream trading locations registered higher prices despite decreased weather load this week. Spot prices at Transcontinental Pipeline’s Zone 6 trading point for delivery into New York City, which started the week at $2.21 per MMBtu , showed a $0.09 per MMBtu price gain over the week (Wednesday to Wednesday) to close at $2.30 per MMBtu (up 4.1 percent). Over the same period, and experiencing similar weather drivers, the Chicago citygate spot price registered a 9 cent per MMBtu price gain (from $2.12 per MMBtu last Wednesday), ending the week at $2.21 per MMBtu (up 4.2 percent) and at parity with Henry Hub prices.
In the midst of record-high March temperatures throughout most of the country during the past week, consumption decreased due to an absence of heating load. According to estimates from BENTEK Energy LLC (Bentek), domestic natural gas consumption fell by 9.5 percent from last week. The residential/commercial sector led the decrease with a 25.0 percent week-over-week loss, while the industrial sector registered a 4.4 percent loss. The power sector posted a 3.6 percent increase due to a record level of nuclear power plant outages and weather in isolated locations being warm enough to trigger early cooling loads.
Total supply was essentially flat for the week despite a small increase in dry gas production. According to Bentek estimates, the week’s average total natural gas supply posted a 0.1 percent increase from last week’s level, led by a modest increase in dry gas production. Domestic weekly dry gas production averaged 63.8 Bcf per day, 0.8 percent higher than the previous week and 6.5 percent above this time last year. The increase in this week’s dry gas production was offset by a 9.7 percent decrease in imports from Canada, which averaged 4.4 Bcf per day over the period. Imports from Canada stand 6.9 percent below year-ago volumes for the same week. There were upward supply increases of 17.0 percent registered in the liquefied natural gas (LNG) arena during the week, where sendout averaged 417 MMcf per day; however, sendout volumes remain 55.0 percent below year-ago levels.