The growing natural gas production from the United States Eastern region over the past couple of years has played a key bearish role within the overall American natural gas theater.
The Eastern territory contains numerous important pricing locations. Although the various hubs offer spot pricing information, not all of them provide substantial forward month pricing (and forward trading). The Leidy and Zone 4 Marcellus hubs represent notable natural gas output centers within the East. Algonquin City Gate, in contrast, is a widely-watched Eastern delivery point.
Focusing on the Leidy and Zone 4 Marcellus Hub spot marketplaces together offers insight into Eastern region price trends. The first attached chart averages the Leidy and Zone 4 Marcellus spot prices (individual series from Bloomberg; daily settlements) since mid-November 2011).
The general price trends for this Leidy/Z4Marcellus benchmark over the past two years (see the solid black line on Chart 1) generally parallels those of NYMEX nearest futures continuation (Henry Hub/Louisiana, which rests within the EIA’s “Producing Region”. The chart also shows that many key price turning points for the Leidy/Z4 Marcellus spot combination have occurred around the same time as those in the NYMEX first futures continuation contract. The handwritten Leidy/Z4Marcellus prices are in blue ink, the NYMEX handwritten ones in black, Thus this Eastern price behavior frequently tends to confirm (intertwine with) notable NYMEX natural gas price trends.
FOLLOW THE LINK BELOW to download this market essay as a PDF file.
US Natural Gas- Two Eastern Region Producing Locations (8-13-13)
Natural Gas Charts- Two Eastern Region Producing Locations (for 8-13-13 essay)