Friday, November 20, 2009

Spot Price Down Today, Volatility Up in Recent Months

Another week of wildly fluctuating natural gas spot prices comes to an end.  The Henry Hub natural gas spot price closed down 44 cents, or 12.4%, to close at $3.11/MMBtu. 

Since last Friday's close was $2.44, that implies a gain of 27.5%.  Sounds good on the surface, but what a wild ride to get there!  The average change of the daily closing price this week was 13.3%.  Glancing back at the period between June 1 and August 31, the daily change never got into double digits, and the average daily change was 3.3%.  Since September 1, the average daily change has been 7.4%.  In the last 57 trading days since September 1, there have been 12 days when the closing price change was greater than 10%.

That volatility is astounding, but I guess it's not entirely surprising given the weird world that natural gas finds itself in these days.

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