Mild temperatures contributed to lower natural gas prices this week. There were slight fluctuations during the week resulting from brief periods of colder temperatures and winter-weather forecasts, but the decreasing trend since mid-December was maintained. For the week (Wednesday to Wednesday) on January 25, the spot price at the Henry Hub had fallen 35 cents, or about four percent, to $8.50 per million British thermal units (mmBtu). This Wednesday's price of $8.50 was $2.04, or 32 percent, above last year's level of $6.46. While prices are higher than historical levels, prices are more than a dollar lower than August 2005 prices before Hurricanes Katrina and Rita. These prices are also lower d espite the remaining shut-in gas production in the Gulf of Mexico.
Shut-in natural gas production in the Gulf of Mexico was 1.656 billion cubic feet per day as of Wednesday, January 25, from its level on January 11 of 1.805 billion cubic feet per day.
The amount of natural gas in storage in the East Region decreased 3.8 percent to 1,404 billion cubic feet for the week ending January 20, which was 225 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.