Tracking natural gas prices through a demand peak

ByRod Adams

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.

Rod Adams
Rod Adams

Rod Adams is Managing Partner of Nucleation Capital, a venture fund that invests in advanced nuclear, which provides affordable access to this clean energy sector to pronuclear and impact investors. Rod, a former submarine Engineer Officer and founder of Adams Atomic Engines, Inc., which was one of the earliest advanced nuclear ventures, is an atomic energy expert with small nuclear plant operating and design experience. He has engaged in technical, strategic, political, historic and financial analysis of the nuclear industry, its technology, regulation, and policies for several decades through Atomic Insights, both as its primary blogger and as host of The Atomic Show Podcast. Please click here to subscribe to the Atomic Show RSS feed. To join Rod's pronuclear network and receive his occasional newsletter, click here.

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