Natural Gas Weekly Update Report, January 7, 2016
Basis differential narrows in Marcellus
At the Marcellus-shale area trading points, natural gas prices normally trade well below the Henry Hub national benchmark price because of the area's high gas production and limited pipeline takeaway capacity. The difference between the Marcellus pricing points and the Henry Hub, commonly referred to as the basis differential, has narrowed somewhat in recent months as new pipeline projects have come online and consumption of natural gas for heating has ramped up. While prices in the region are still very low, trading under $1.50 per million British thermal units (MMBtu), since November they have moved somewhat closer to the Henry Hub price. The price at Transco's Leidy Hub, for example, has averaged 89¢ below the Henry Hub since December 1. In July of 2015, on the other hand, the differential was much larger, averaging $1.65/MMBtu for the month.
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