Thursday, September 3, 2009

Like a Stone

The Henry Hub spot price fell 18 cents, or 8%, to $2.06 today.  That is a 25% drop in one week!  I guess the market didn't like today's storage numbers at all.  The news is not all bad, however, because August saw the first expansion of U.S. manufacturing since January 2008 and manufacturers reported new orders at the highest level since the end of 2004. Since manufacturing is a big gas customer, this is good news.  Unfortunately, the concerns regarding oversupply overwhelm all else in the natural gas market.  This will be the story until the end of October.

The Energy Information Administration also released its weekly natural gas price roundup today.  Ugly.  The chart below shows that the price of oil, on an equivalent MMBtu basis, was still 5.2x greater than that of natural gas.  Too bad we're not all driving a natural gas-powered Honda Civic GX.  That ratio is going to get worse this week for sure.


At this price, I can't imagine anyone in the North American natural gas industry is making any money.

Honda Civic GX:

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