Better Handle for Next Winter

At the NYMEX, the price of the futures contract for August delivery decreased in three of four trading sessions this week, but posted a net decrease on the week of just 1.8 cents per MMBtu. The contract’s price at the end of trading yesterday was $6.600 per MMBtu, which is 21 percent lower than the August contract high this year (reached in May) of $8.362. All futures contracts through the end of the next heating season also decreased on the week, while the contract prices from April 2008 through July 2008 were slightly higher. As a result, the price of the 12-month strip, or the average price for contracts over the next year, dropped 4.2 cents per MMBtu, or less than 1 percent, to $7.786. The price of the near-month contract is $0.967 per MMBtu higher than last year’s price at this time (on July 11, 2006, the August 2006 contract settled at $5.633 per MMBtu). At this time last year, the difference between the Henry Hub price and the price for the NYMEX contract for delivery the following January (the month that is normally the highest price in the 12-month strip) had widened to $4.51 per MMBtu, a spread that was highly unusual. The corresponding spread this year is still atypically high, but is narrower at $2.07 per MMBtu. Currently, the January 2008 contract is priced at $8.722 per MMBtu.
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp