Spot natural gas prices at the Henry Hub shot higher last week as cold weather in Texas stoked concerns about winter supplies and a US government report showed another large draw from gas storage.
The Henry Hub spot index in the week ended 3 February averaged $5.80/mmBtu, up by 37pc from the average price a week earlier. The spot index peaked this week at $6.455/mmBtu, or 4pc higher than the bid week price for February. The Henry Hub in Erath, Louisiana, the US benchmark, is the delivery point for gas traded in the Nymex futures market.
Prices there likely received a boost last week as cold weather in Texas limited gas supplies. Spot prices at Waha in west Texas were at a premium to the Henry Hub price on 2-3 February, an indicator that Permian gas output was constrained.
In addition, the US Energy Information Administration (EIA) last week reported another large draw from US gas storage that pulled total US inventories further below average levels.
Withdrawals from US gas storage this winter have outpaced the five-year average because of frigid weather in January. Inventories in the 11 weeks ended 28 January dropped by 1.321 Tcf (37bn m³), or 4pc larger than the five-year average drop for that point in the heating season, according to EIA data.
Draws had trailed average levels heading into last week. Stockpiles last week declined by 268 Bcf, surpassing the five-year average by 118 Bcf. Withdrawals should taper in the coming weeks as seasonal temperatures moderate in February and March, according to analyst estimates.
Total US gas stockpiles as of 28 January were 2.323 Tcf — 5.8pc below the five-year average and 15pc lower than a year earlier. Inventories were 1pc below the five-year average a week earlier. Below-average inventories can support higher gas prices by stoking concerns about spikes in demand or supply shortfalls.
