Top Energy Economist Predicts Spring NatGas Price ~$5/Mcf
The price of natural gas, both the futures price at the Henry Hub NYMEX, and the spot price at hundreds of trading hubs across the country, continues to rise. The commodity price of natural gas has been the focus for a number of MDN posts in recent weeks. The question we’re often asked is, What will the price do over the next year or so? Will it stay this high? Will it decrease? We have two articles to share predicting what the NYMEX price of natural gas will be in the spring (and beyond). We think you’ll find both articles interesting. Let’s haul out the crystal ball…
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Yesterday the “front month” October contract for the Henry Hub NYMEX price of natural gas soared 11% and settled at $5.706/MMBtu, the highest closing price since Feb. 21, 2014. Intraday trading went well over $6 per MMBtu. We keep seeing the word “contagion” as the main explanation for the soaring price. No, not the COVID contagion, but the psychological contagion of high prices globally. The price of natgas in Europe and Asia is skyrocketing (in the $25-$30/MMBtu range), which causes traders here to anticipate demand for our gas (via exports) will remain strong, driving up domestic prices. Ultimately fear drives the financial markets more than any other factor.
According to the U.S. Energy Information Administration, high global demand and low global supply are contributing to the rapid increase in U.S. propane spot prices. At one point last year, propane spot prices averaged just above $0.20 per gallon. Right now it’s averaging $1.33 per gallon!
Yesterday we brought you the good news that two new LNG export facilities will, in all likelihood, begin full-scale operations by the end of this year (see 
The weather turning a bit cooler along with a three-week planned maintenance outage at the Cove Point LNG plant in Maryland is causing the spot price for natural gas in the Marcellus and Utica to fall precipitously. Of course the price recently, over the past few weeks, rose precipitously–so a sudden fall is not all that unusual. How much has the price fallen and how far will it go down?
MDN editor Jim Willis has had several conversations this past week about the price of natural gas and how prices in the Marcellus/Utica are influenced by national and international events. “Is it possible,” one questioner asked, “to say that if the NYMEX price is X, then my local trading hub in the M-U will likely be X plus or minus Y?” Unfortunately, the answer is no. There is no one “price” of natural gas. The Henry Hub futures price (the NYMEX) is often quoted as “the” price, but in reality, there are hundreds/thousands of prices. Natgas is a commodity and traded at hundreds of points along major pipelines throughout the country. This post attempts to explain more about the complex landscape of what influences the price of natural gas where you are.
The NYMEX futures price for natural gas hit yet another 7-year high yesterday, closing up $0.20 to close at $5.46/MMBtu. The national spot price average (for physically traded/delivered gas) was up $0.18 to an average of $5.53/MMBtu. According to Bespoke Weather Services, the reason for ongoing run-up in prices is fear: “It is all fear in the market, owing to storage levels that are viewed as less than sufficient in the event of a cold winter, not just here in the U.S. but even more so over in Europe.”
Once again we’re talking about the price of natural gas–both the NYMEX futures price and the physical spot price. Yesterday the NYMEX hit a new post-pandemic high of $5.26/MMBtu. The NGI national average for spot prices (physical gas traded at hundreds of trading hubs across the country) rose to $5.35/MMBtu. The spot price in the Marcellus/Utica in both the northeastern and southwestern portions of the play also rose to new highs and is (gasp) coming close to the levels we saw during February and Winter Storm Uri. Again we ask the question: How long will prices stay this high (or even go higher)? We have some insight on that question below.
Lately, we’ve brought you a number of articles about the price of natural gas, both the financial NYMEX futures price (from the Henry Hub), and the spot price gas fetches at various trading hubs around the Marcellus/Utica region. The price of gas matters. It drives higher royalties for landowners, higher profits for drillers, and ultimately whether or not there is an increase (or decrease) in drilling new wells. Yesterday was another historic milestone. The NYMEX futures price for the “front month” (October) closed over $5 per MMBtu. That’s the first time the closing price for the current NYMEX contract has been over $5 in seven years (since 2014).
Just two days ago MDN told you about whispers that the NYMEX price of natural gas may actually hit or surpass $5/MMBtu (see 
The price of natural gas futures (the NYMEX) continues to hit new post-pandemic highs. The NYMEX price is high and remains high, as we pointed out on Friday, due to low storage numbers and Hurricane Ida shutting down Gulf of Mexico natgas production (see 
The price of natural gas has almost doubled over the past year. In September 2020 the NYMEX Henry Hub price stood at $2.41/MMBtu. Yesterday the price closed at $4.64/MMBtu. Astonishing! The question keeps coming: Why is the price of natgas high and staying high, even though production in the country’s largest shale gas basin–the Marcellus/Utica–is on the rise? It’s a paradox. The short answer is that (1) production in other basins has not bounced back like the M-U following the pandemic, and (2) there is more demand, in the form of exports, for American natgas (via pipeline and LNG). Increasing demand with the same or less supply equals higher prices.
On Monday MDN told you that given supplies of natural gas going offline on the Gulf of Mexico due to Hurricane Ida, and given that the hurricane missed major LNG export facilities (meaning they will continue to operate and export gas), the price of natural gas was/is skyrocketing (see 
According to the experts at RBN Energy, U.S. LNG feedgas demand “has been the single biggest factor behind the soaring natural gas prices and storage shortfall this year.” Feedgas is the gas that feeds LNG export facilities. Two more LNG facilities are due to begin operation in the first half of 2022, both of which have the potential to use Marcellus/Utica molecules. RBN does a deep dive into how LNG export facilities ramp up and when even more feedgas demand will increase.