What’s Up With Natural Gas Prices?

 

The natural gas market appears hesitant to react to forecasted temperatures well-below-average for the eastern half of the U.S. through the middle of December.  Overall US demand levels for December are projected to average 94.1 Bcf/day, exceeded only by December 2013 ahead of the polar vortex winter and December 2016 when NYMEX prices were near $4/MMBtu.  Over the last four trading sessions, the January NYMEX has dropped 19.4 cents.  Currently the NYMEX Henry Hub Gas Futures contract average price for 2018 is at $2.92/MMBtu.

Instead, the emphasis has been placed on strong production levels.  Growth in natural gas demand remains robust. Pipeline exports to Mexico and consumption in the chemical sector are surging, exports of liquefied natural gas (LNG) have reached 2 Bcf/d, and utilities are moving toward fast-cycling natural gas plants to complement increasing amounts of intermittent renewables on the grid.  Each of these components have increased natural gas demand in recent years. However, natural gas production growth has kept pace.  Current national production levels continue well above 76 Bcf/d, more than 5 Bcf/d above year-ago levels.