News / Business
Natural Gas Prices Rise Across the U.S.
As colder weather hits much of the U.S., physical natural gas prices have rallied. Meanwhile, natural gas NYMEX prices have weakened. Is this a sign of things to come?
Verona, WI — October 7, 2009 – Physical cash prices rallied yesterday throughout the U.S. Most regions experienced $.20-$.30 per MMBtu price gains. Meanwhile, the front-month natural gas NYMEX contract, November 2009, tumbled by about a dime. “The price spread between physical cash prices and the front-month futures prices is still around $2.50, which is way too wide,” says Valerie Wood, President of Energy Solutions, Inc. “The two prices need to converge.”
Cash prices could very well continue to move up with the onset of colder weather. However, many analysts expect the November 2009 natural gas NYMEX contract to also move higher solely because of technical signals. “Historically, cash prices and NYMEX prices converge at the end of the month. For example, by the end of October, physical cash prices and the front-month NYMEX should be much closer in price because the two become one and the physical market begins to represent prices for November rather than October,” says Wood.
The question becomes will October physical prices move up between now and the end of October or will the November 2009 natural gas NYMEX price move down. “Ideally, it will be a little bit of both. However, the rally in natural gas prices on the NYMEX seems to be supported by a number of other factors including the historical fourth quarter technical rally,” says Wood. “Therefore, we could still see a price gap between physical prices and NYMEX prices at the end of the month. If this price gap doesn’t adequately close by the end of October, we would expect it to close at some point in November or early December as the technical fourth quarter rally is replaced with the historical first quarter decline.”
For more insight into natural gas prices, request a complimentary copy of the October edition of The Advisor (to be released this week) or simply send an e-mail to request-oct-pr7@energysolutionsinc.com or call (608) 848-9859.
About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 25 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.
