Natural Gas Prices are going up - Mar 1

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Natural Gas Prices are going up - Mar 1

Post by dan_s »

I just looked at the NYMEX strip for Henry Natural gas prices. The price of the front month NYMEX contract for HH gas is what you see as the gas price in the U.S. Spot prices are often much different. Gas prices in California have averaged over $10.00 all winter.

Here is the link: https://www.cmegroup.com/markets/energy ... uotes.html

Look at this trend. These are the prices that upstream companies can lock in today for the next four quarters by buying futures contracts.
APR23 to JUN23 > $2.98
JUL23 to SEP23 > $3.33
OCT23 to DEC 23 > $3.77
JAN24 to MAR24 > $4.11

The gas price selloff in January and February was purely the result of hedge funds needing to unload their long positions and the utilities not being willing to take physical delivery. Now that the futures market is back in balance, the U.S. natural gas price should drift back up over $4.00 by early Q3. The utilities that get the electricity to your home and businesses know that gas fired power plants will need more gas to get us through another hot summer. There is already a lot of coal-to-gas fuel switching happening.

BTW my long-range weather forecaster says March and early April is going to be much colder than normal in the eastern U.S., so winter is not over yet. The best-case scenario for the gassers is if draws from storage continue into April, even if they are very small. The last time we saw that happen was April 2018, which was the last time the MJO stayed in Phases 7 and 8 through March and into April.

We will be publishing an updated profile on Range Resources (RRC) this week. It is one of my favorite "gassers".
Dan Steffens
Energy Prospectus Group
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