Factors contributing to price decreases this week were high linepack on some western pipeline systems, returning production in the Gulf of Mexico from storm-related shut-ins, and the lack of a threat to offshore production from the latest tropical storms although record-setting heat and power usage applied upward pressure on prices. As of July 22, the Minerals Management Service reported that only 107 million cubic feet per day of natural gas production remained shut in. For the week (Wednesday to Wednesday), the spot price at the Henry Hub fell 25 cents, or about 3 percent, to $7.50 per million British thermal units (mmBtu). The Henry Hub price was $1.61, or 27 percent, above last year's level of $5.89.
The amount of natural gas in storage in the East Region increased 3.3% for the week ending July 22 to 1,288 billion cubic feet which was 65 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.
