Natural gas prices drop due to warmer weather

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As temperatures warmed and natural gas heating demand declines, northeastern and Mid-Atlantic prices dropped below the national benchmark Henry Hub spot price on several days since the end of March. This is a reversal of price movements of the past several months, when Boston and New York prices frequently rose far above the national benchmark. In January, for example, New York prices at Transcontinental Pipeline's Zone 6 (Transco Z6 NY) trading point averaged $30.39 per million British thermal units (MMBtu), compared to $4.70/MMBtu at the Henry Hub.

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The spot price at Transco Z6 NY, which has been trading below the Henry Hub spot price for most of April, fell to $3.57/MMBtu on Friday, April 11, $1.08/MMBtu less than the Henry Hub closing price of $4.65 that day. Other northeastern and Mid-Atlantic prices similarly fell; Tetco M-3 closed at $3.79/MMBtu and the Algonquin Citygate price averaged $4.08/MMBtu. The warm weather and decline in heating demand played a role in declining prices; on Saturday, residential and commercial natural gas heating demand was at its lowest level since October, according to Bentek Energy data. Pipeline flows of natural gas from Canada into the Northeast also dropped to six-month lows, according to Bentek data.

While Northeast and Mid-Atlantic prices fell heading into the weekend, the Henry Hub price (and other spot prices in the Gulf of Mexico region) rose slightly. Some trade press reports attributed this to warm weather in the region and increased cooling demand, as maximum temperatures reached into the 80s and even 90s in the Gulf region.

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The weekly average natural gas plant liquids composite price increased for the third week in a row. The composite price rose this week (covering April 7 through April 11) by 2.6%, and is now at $10.20/MMBtu. All five of the components of the composite price increased this week. Natural gasoline increased by 2.7%; ethane, 3.2%; propane, 3.2%; butane, 0.9%; and isobutane, 1.6%. 

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