NYMEX Henry Hub NatGas Closes at $1.97, Lowest Price in 3 Years
Here we go, to the bad old days, once again. Yesterday, the “front month” or “prompt month” for the NYMEX Henry Hub futures contract closed below $2/MMBtu — closing at $1.97. It is the lowest close for the NYMEX front month contract since September 2020, when it closed at $1.83. Yeah, the bad old days of lower for longer. The reason for the current crash in price is, as we told you yesterday, largely due to warm weather (see NatGas Price is Crashing and Burning – How Low Will It Go?). Trading experts say the next level to be tested to see if the price will head even lower will be $1.80/MMBtu. God help us if it closes that low.
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U.S. natural gas and power prices hit multi-year highs in mid-January with the prospect of frigid temps and snow storms in various portions of the country (see 
Once a month, the analysts at the U.S. Energy Information Administration (EIA) issue the agency’s Short-Term Energy Outlook (STEO), their best guess about where energy prices and production will go in the next 12 months or so. We sometimes poke good-natured fun at the EIA because their predictions go up in one month, and in the next month, they go down, etc. What about the latest STEO dart board, published yesterday? It won’t surprise you to read that due to warmer weather, the EIA prognosticators believe the average Henry Hub natural gas spot prices will remain “subdued” around $2.40/MMBtu in February and March. What about for the entire year?
Analysts for S&P Global Commodity Insights have been pouring over the forward prices for natural gas contracts in 2024 and the news is not good. Traders actively bidding on forward contracts in 2024 have priced natural gas below $4/MMBtu. In the forwards market, the summer 2024 strip was $2.45/MMBtu as of Jan. 22, after spending most of 2023 solidly above $4/MMBtu. December 2024 Henry Hub forwards settlements have averaged $3.69 year to date, according to data from S&P. The reason for prices remaining low for all of 2024? A delay in several new LNG export operations from coming online.
Just one week ago, the price of natural gas, both the futures price and spot (physical) price, jumped — in some cases by four times in the space of just a couple of days (see 
Well, that didn’t take long. Yesterday we told you about the huge jump in the price of natural gas, both the futures price and the spot (physically traded) price, due to the brutal cold snap much of the country is currently experiencing (see 
U.S. natural gas and power prices hit multi-year highs on Friday with the prospect of frigid temps and snow storms in various portions of the country. The extreme cold was expected to bring record gas demand and cut supplies by freezing wells. The spot price of natural gas at various trading hubs from the West Coast to Middle America to the East Coast all jumped. Of particular interest for us, spot gas prices at the Eastern Gas South hub, widely considered the “benchmark” for the Marcellus/Utica, jumped from $2.45 per million British thermal units (MMBtu) on Thursday to $10.40 on Friday — the highest price at that hub since July 2008.
The U.S. Energy Information Administration (EIA) published a post yesterday on the agency’s newly revamped Today in Energy website to announce it expects the Henry Hub natural gas spot price to average under $3.00/MMBtu in 2024 and 2025. What joyous news (not). The post explains the reasoning and thinking of EIA analysts and why they believe the price of natural gas will be, sadly, lower for longer.
Yes, we’ve noticed. The Henry Hub NYMEX futures price for natural gas soared yesterday. It has been on an upward trend for the last six trading days in a row. Yesterday, the NYMEX price jumped $0.21 (6.6%) to close at $3.19 per MMBtu. Spot (physical) prices have also moved higher. What’s causing it? And will the futures price now stay above $3?
EQT CEO Toby Rice appeared on CNBC’s ‘Money Movers’ program last Friday to discuss what he expects for natural gas prices this year, what lower natural gas production means for EQT, and more. It was an interesting segment (watch it below; it is just four minutes long). Rice said, among other things, that a key issue for people to understand is that the marginal cost (i.e., the breakeven cost) in the U.S. to produce natural gas is around $3.50/MMBtu, which will hold production levels flat. Prices lower than that lead to lower production.
Zacks is one of the top investment research firms focusing on stock research, analysis, and recommendations. A new alert issued by Zacks asks this question: Is Natural Gas Poised for a Turnaround After 2023 Slump? The article recaps what happened to the price of natural gas in 2023 and what may happen in 2024. Interestingly, the author says the natural gas space “is currently quite unpredictable and spooked by the sudden changes in weather and production patterns. As such, investors are clueless about what to do.” Boy, that about sums it up, right? Even without a clue about the future, Zacks makes a couple of stock pick recommendations (of M-U companies) that it feels are safe bets…