Natural gas spot prices at their lowest levels this year
Natural Gas Weekly Update (EIA)
Spot natural gas prices moved lower this week at trading locations across the Lower 48 States, as fear of a slowing economy and turmoil on Wall Street affected the entire energy industry. Current instability in the banking sector is expected to have a variety of longer-term effects on the natural gas industry (including access to credit). This would considerably dampen demand for energy in all consuming sectors, but particularly affect demand in the industrial sector (where natural gas is the primary fuel for close to 40 percent of energy consumption). As concerns over the economy evolved this week, the price at the Henry Hub in Erath, Louisiana, fell to its lowest point since November 9, 2007, averaging $6.58 per MMBtu yesterday. On the week, the Henry Hub price was 83 cents per MMBtu lower, or about 11 percent less than on the previous Wednesday. On a regional basis, spot markets along the Gulf Coast in Louisiana and East Texas registered an average price decrease of $0.82 and $0.78 per MMBtu, respectively.
Recent price decreases have also been related to an improved outlook for domestic production. According to the September edition of EIA’s Natural Gas Monthly, domestic production has increased 8.5 percent during the first 7 months of 2008 in comparison with the same time period in 2007. The percentage growth for the year-to-date volumes likely will decline as data are reported for the months affected by Hurricanes Gustav and Ike.
The price of crude oil declined steeply this past week, decreasing 9.5 percent to below $90 per barrel for the first time since February 7. The West Texas Intermediate (WTI) price averaged $88.91 per barrel on Wednesday, or $15.33 per MMBtu, which was $9.32 per barrel lower than the previous Wednesday.
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EIA: Retail Prices
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