Warmer-than-normal temperatures led to lower natural gas prices this week. For the week (Wednesday to Wednesday) on January 11, the spot price at the Henry Hub dropped 70 cents, or nearly eight percent, to $8.55 per million British thermal units (mmBtu). This is the lowest price since August 4, 2005, more than three weeks before the major hurricanes disrupted supply activities in the Gulf of Mexico region. This Wednesday's price of $8.55 was $2.59, or 43 percent, above last year's level of $5.96. The remaining shut-in production in the Gulf of Mexico continues to be a factor in elevated price levels.
Shut-in natural gas production in the Gulf of Mexico was 1.856 billion cubic feet per day as of Monday, January 9, from its level on the previous Thursday of 1.879 billion cubic feet per day.
The amount of natural gas in storage in the East Region decreased 1.9 percent to 1,491 billion cubic feet for the week ending January 6, which was 122 billion cubic feet above the 5-year average. Nebraska is a part of the East Region (see map) which is a major natural gas consumer, particularly in the residential and commercial sectors. The industrial sector, which includes agriculture, is also a major consumer in this state. Most of the gas is supplied from the Producing Region with a fair amount imported from Canada. The Henry Hub in southern Louisiana is a major market center with interconnections for many of the pipelines that transport U.S.-produced gas to the East Region. Furthermore, the Henry Hub is the preferred reference point for prices for most of the domestic gas destined for the East. Therefore, market conditions and developments in the East Region and price movements and trends at the Henry Hub are usually highly correlated.
Notes: An archive is available. Divide the price by ten (10) to obtain the price per hundred cubic feet (ccf) or the approximate price per therm.