Natural Gas

The front-month natural gas futures contract for delivery at the Henry Hub settled at $2.97/million British thermal units (MMBtu) on January 10, a decrease of $1.37/MMBtu from December 3 (Figure 4). Colder-than-normal weather and below-average inventory levels resulted in higher prices and volatility in November and through early December. However, milder temperatures in the second half of December contributed to substantial decreases in prices, returning them to September levels. For the three weeks ending January 3, U.S. heating degree days were 20% less than normal. The moderate weather also helped to slow the rate of inventory withdrawals. Natural gas inventory withdrawals were 256 billion cubic feet (Bcf) less than the previous five-year average for the three weeks ending January 4, helping to narrow the deficit from the five-year average to 464 Bcf for the week ending January 4 from 725 Bcf for the week ending November 30.