CME/NYMEX Henry Hub natural gas futures prices have been relatively tight this injection season and have averaged around $2.60/MMBtu since June, a third or less of what the prices during the same period last year, between $7 and $9/MMBtu. range and below the costs of most natural gas producers. However, this is a much better scenario than it could have been given that the first quarter of 2023 was one of the most bearish in more than a decade and led to a massive storage surplus over the last year that persisted for much of the summer. Since the annual monthly average low of $2.19/MMBtu was established in April, fast futures rose to an average of almost $2.50/MMBtu in June, ~$2.65/MMBtu in July and August, and have remained mostly between $2.50 and $2.75. range in September so far. In today’s RBN blog, we break down the factors that have prevented prices from breaking out this injection season so far and the implications for the rest of the shoulder season.
In ours Top 10 blog predictions of 2023, published on the first business day of the year, we predicted that the 2023 halt in new LNG export capacity additions would trigger an oversupplied gas market this year, the kind that defined the it was Shale, although that’s the last we’re likely to see. for some time Production had recovered since December’s winter storm Elliott to the level of more than 100 Bcf, which was more than 6 Bcf/d higher than a year ago at that time. Freeport LNG was still offline after a fire in early June 2022, the timing of its return was uncertain and the next leg of new export capacity was not expected for another year at most soon But as it turned out, LNG was not the only, or even the biggest, bearish demand factor that overcame gas prices earlier this year. What we didn’t know when we published this blog was that January and February, usually among the coldest and most demanding months of the year, would be among the warmest on record, especially in the eastern United States, and would place in one of The most bearish start to a new year that the market had seen in more than a decade (which we chronicled in The final countdown).
Figure 1. CME/NYMEX Henry Hub spot gas futures price history. Source: Bloomberg
