At the NYMEX, the price of the September 2011 contract mirrored the price response of other market points and decreased 22.8 cents (5.3 percent) over the week from $4.318 per MMBtu last Wednesday to $4.090 per MMBtu yesterday. Since last Wednesday, expectations of cooler temperatures with the attendant diminished cooling load has likely been the chief catalyst propelling futures to a string of losses accounting for the decrease.
The Henry Hub price echoed the week’s general price decline by falling 4.5 percent from $4.46 per MMBtu during the week to close at $4.26 per MMBtu yesterday. As the accompanying table shows, the Henry Hub cash price began its descent starting last Wednesday with price losses totaling 20 cents during the midst of the cool down.
End-market natural gas prices generally followed the lead of their wholesale counterparts and responded to moderating temperatures with similar losses. The New York citygate, which started the week at $4.93 per MMBtu (following a dramatic price spike the previous week), lost ground every day of the week except one. The New York citygate decreased by $0.31 per MMBtu over the period (Wednesday to Wednesday) to close at $4.62 per MMBtu (down 6.3 percent). During the same period, the Chicago citygate fell a more mundane $0.19 per MMBtu and ended the week at $4.32 per MMBtu (down 4.2 percent).
Spurred by the easing heat trend, consumption registered a modest decrease. According to estimates from BENTEK Energy Services, LLC, domestic gas consumption decreased this week by 1.3 percent over last week. The power sector led the decline with a loss of 1.4 percent, mostly reflective of a reduction in cooling load for air conditioning. Likewise, the residential/commercial sector also posted a loss. However, running counter to the overall consumption downtrend, the industrial sector rose 0.4 percent.
In the midst of the generally softening price environment, overall supply was down slightly. According to BENTEK Energy estimates, the week’s average total nominal gas supply posted a 0.8 percent decrease from last week’s level. Domestic weekly dry gas production hovered around 61 Bcf per day (up 0.2 percent) from the previous week despite Tropical Storm Don which briefly skirted the Offshore Gulf of Mexico and caused a small amount of production to be shut-in. Domestic dry gas production now stands 6.5 percent above this time last year. The week’s slight production gain was offset somewhat by a 7.9 percent decrease in Canadian imports which averaged 6.7 Bcf per day. Canadian imports remain 7.3 percent below year-ago volumes. Supply again abated for liquefied natural gas (LNG) where imports slid to just over 0.4 Bcf per day during the week, and remain 44.0 percent below year-ago levels.