The spot (immediate delivery) price of natural gas continues to increase rapidly because of the high demand for electricity during the summer heat wave. Since there is an end in sight with a “cold” front on the way, the “future” prices (those deals where traders are purchasing a product to be delivered sometime in the next few months) have eased a bit since my post on 1 August.
As of the close of trading yesterday, here are the prices at some key locations:
|NYMEX Henry Hub Future||$7.50 per million BTU|
|NYMEX Henry Hub Spot||$8.65 per million BTU|
|New York City Gate Spot||$10.27 per million BTU|
Source – Bloomberg. Com Energy Prices 2 August 2006
The reason for tracking these prices closely for a while is to illustrate the volatility of the market prices for a product like natural gas that is difficult to store, but whose use varies almost as rapidly as the weather.
One more factor to watch – Tropical Storm Chris will begin to play a role in the market if it looks like it might affect production from Gulf of Mexico wells. I am following reports from the Houston Chronicle SciGuy among others.