Price of NatGas Up Huge $0.30 in 1 Day as LNG Exports Pick Up

Yesterday the price of natural gas trading on the NYMEX futures exchange, a price based on the spot price at the Louisana Henry Hub trading point, zoomed up, closing 30 cents higher than the trading day before (up 14%). There does not appear to be a single, specific reason why trading took off like wildfire. Some speculate it rose based on the good news that U.S. LNG exports are once again on the rise. Others say short-term forecasts are now predicting continued hot weather. Whatever the reason, we’ll take it!
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M-U Gas May Have Trouble Getting to Other Markets This Fall

The experts at RBN Energy have been analyzing pipelines and natural gas flows out of the Marcellus/Utica region and warn of a coming problem this fall. Production in the M-U remains high. Storage is quickly filling up. The gas needs to exit the region in order to fetch better prices. According to RBN, “This fall, the situation could be even worse and may force producers to shut-in gas for a second time this year.” Pipeline constraints are coming, and that spells problems.
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Investors Love M-U Companies, Even Though Gas Price is Low

How does one make money in the natural gas market these days when the price of gas is at historic lows? One way is if an investor was fortunate enough to bet the price would go down. Those folks made money. The other way is to…invest in drillers? Yep. Even though low prices hurt drillers, investors still like the looks of what is on the horizon, especially for companies operating in the Marcellus/Utica. Example: The stock price for Range Resources and EQT is up over 30% each this year so far.
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How to Predict Price of NGLs – The Spread Between Oil & NatGas

Here’s a little known factoid that will be useful for anyone wondering what the price of NGLs (natural gas liquids) will bring in a given market at a given time. The U.S. Energy Information Administration (EIA), our favorite government agency, points out NGLs almost always fetch prices that are “range-bound” between the price of oil on the high end, and the price of natural gas on the low end. Natural gasoline (an NGL) tracks closest the high end and the price of crude oil, while ethane is at the bottom of list closest to the price of methane.
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The Coming Price Meltdown for Marcellus/Utica Gas This Fall

The price of natural gas and what it fetches (by geography) is always a top concern for both drillers and landowners. Recently the price of natgas nationwide has been trading at a 25-year low (see U.S. Natural Gas Price Hits 25-Year Low, Storage Nearly Full). The price natgas will fetch for Marcellus/Utica drillers is possibly heading, according to the experts at RBN Energy, for a “meltdown” this fall. We don’t like the sound of that…
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EIA: Gas Price Avg <$2 in 2020, 110 LNG Export Cargoes Canceled

Our favorite government agency, the U.S. Energy Information Administration (EIA), issued its monthly Short-Term Energy Outlook (STEO) yesterday. We’re interested mainly in the natural gas numbers. The expert number crunchers at EIA predict the price of Henry Hub traded gas will average $1.93 for all of 2020 (although EIA predicts the price will rise in Q420 to $2.46). The report also says U.S. LNG exports are taking a nosedive this summer. From June through August at least 110 LNG cargoes have been canceled–meaning a decrease in 75% of our LNG exports. That will have a big impact on gas drillers.
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U.S. Natural Gas Price Hits 25-Year Low, Storage Nearly Full

Reuters is reporting natural gas prices “collapsed” over 7% and hit a “near 25-year low” yesterday. The article says demand destruction from the coronavirus and worldwide shutdowns, along with an excess supply in storage caverns which are “expected to be full by the end of the summer season,” is the reason. Gas in storage is currently 18% above the 5-year average. The July futures NYMEX natural gas price contract, which expires today, was down -9.5% yesterday to $1.44/MMBtu. The August contract closed down -7.9% to $1.53/MMBtu.
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Why is NatGas Price Stubbornly Low Even with Less Oil Production?

The received wisdom has been that with the oil markets getting whacked by the Saudis, the Russians, and the virus, and with new drilling scaled back and oil wells in the Permian, Bakken, Eagle Ford and other oil plays being shut-in, far less “associated gas” would be produced, leading to tighter natgas supplies further leading to higher prices for natgas (benefitting the Marcellus/Utica). But the price of natgas has remained at a 25-year low. What the heck is going on?
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Cash NatGas Price at Henry Hub Hits 21-Year Low – Blame LNG

Yesterday physical natural gas delivered at the Henry Hub trading point hit its lowest cash price in 21 years–since December 1998. Cash Henry Hub settled at $1.38/MMBtu (million BTUs, the equivalent of Mcf or thousand cubic feet). The Columbia Gulf mainline trading hub (in Louisiana) plunged to $1.285/MMBtu. Right here in the Marcellus, the Transco Zone 4 price fell to $1.36/MMBtu. They all hit their lowest settlement levels since 1998. Why? Blame it on LNG.
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M-U Shut-ins Help Keep Regional Gas Prices Stable…for Now

With EQT shutting in one-third of its production, Cabot shutting in some of its production, and today’s news that CNX has shut in production (see CNX Update: Shut-in 375 MMcf/d, Central PA Utica the Future), the cumulative effect of those three (plus other M-U drillers) is that our region now produces at least 2 billion cubic feet per day (Bcf/d) less of natgas than it did just a few months ago. That decrease is helping to “balance” gas flows and help prices to not drop further than they already have.
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May NatGas Deliveries to US LNG Plants Lowest Since Last October

Feedgas, which is the gas that flows to LNG export facilities, hit the lowest levels it has seen since last October according to the U.S. Energy Information Administration. As we pointed out two weeks ago, natural gas prices are staying low because worldwide demand and prices for LNG is currently low (see Why Does NatGas Price Stay So Low with Falling Production?). Low prices will continue for the foreseeable future, with some 20 U.S. LNG export cargoes for June now canceled and another 45 for July rumored to be canceled.
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IEA Predicts Biggest Collapse in Global Energy Investment in History

According to the International Energy Agency (IEA), the “lifeblood” of the global energy system is…investment. That is, money. Without investment, new sources of energy don’t appear. In 2016 IEA began to publish an annual report called World Energy Investment, in order to track spending on all forms of energy worldwide. Earlier this week IEA published its fifth annual version of the report. In the report, IEA says 2020, because of the coronavirus pandemic, will mark the largest-ever collapse in global energy investment in history. IEA says the coming investment decline will impact oil the most.
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Why Does NatGas Price Stay So Low with Falling Production?

It’s kind of a mystery. The supply of natural gas produced in the U.S. has been declining over the past few months. Oil drillers are laying down rigs (historic lows for rigs in the oil patch), and companies are shutting in oil wells–all of which means there’s less associated natural gas being produced. M-U drillers like EQT (the largest natgas producer in the U.S.) are curtailing huge quantities of their production (see EQT Shuts in 33% of NatGas Production in Pennsylvania, Ohio). And yet, with all of this gas being removed from the market, the price of natgas is still stubbornly low. Why?
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$4 Natural Gas This Winter? Maybe, IF Things “Fall into Place”

We spotted an interesting story by S&P Global Platts about the dramatic increase in the stock price for gas-focused drillers, particularly in the Marcellus/Utica. Did you know that EQT’s stock has shot up 127% in value over the past three months? Range Resources and Southwestern Energy are both up 81% in value. Antero Resources is up 76%. It’s impressive! Then again, the stock price for most of those companies decreased by 90% over the past five years, so we have a lot of ground to make up.
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Oil Price Collapse Appears Over Already…Gas Price Impact?

What happens in the oil patch has a direct bearing on the financial health of gas drillers in the Marcellus/Utica, which is why we periodically cover happenings in oil. We’re now beginning to see articles with the theme that the oil price crash is already over. Yesterday West Texas Intermediate (WTI) closed at $32.50/barrel. Still not great, but a lot better than the negative $37.63 we saw a few weeks ago! However, does a higher price for oil automatically mean shale oil drilling will immediately return, and with it more associated gas keeping the price of natgas low?
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