Firming natural gas prices of late in the U.S. are not translating to as much of an increase for Canadian natural gas prices, meaning that the basis – or price discount – for benchmark AECO prices has been widening (i.e., becoming a greater discount). When considering the basis for the prompt month AECO contract price versus prompt month NYMEX-CME natural gas contract price, the discount has shifted from $(0.70)/MMBtu at start of June to near $(1.20)/MMBtu in recent days (blue dashed circle in top chart), meaning that Canadian gas is relatively cheaper by about $0.50/MMBtu than it was just a few weeks ago.
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Fear and Loathing - With Brutally Bearish Fundamentals, How Low Could Natural Gas Prices Go?
It’s been a devastating few weeks for the natural gas market. Sure, Shale Era abundance was supposed to keep gas prices from skyrocketing — and it generally has. But seriously? Henry Hub gas sinking below $2/MMBtu — and staying there, in the depths of the winter heating season? Prices have stabilized a little in recent days as a few E&Ps announced cutbacks in capex and gas-focused drilling, but gas-storage levels are abnormally high, coal-plant retirements have trimmed opportunities for coal-to-gas switching, and any significant gains in LNG exports aren’t going to happen until this time next year. With all that, you’ve gotta ask — as we do in today’s RBN blog — how low could natural gas prices go?
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Razor's Edge - Tight Supply-Demand Balance Brings Back Natural Gas Price Volatility
Volatility is back big time in the U.S. natural gas market. The CME/NYMEX Henry Hub prompt natural gas futures contract in mid-November raced up more than $1.00 (28%) in the span of two days to a settlement of about $4.84/MMBtu on November 14, the highest price since February 2014, only to whipsaw back down 80 cents the next day. And, since then it hasn’t been unusual to see daily swings of 20-45 cents in either direction. As of yesterday, the now-prompt January 2019 contract was at about $4.34/MMBtu, down 27 cents on the day. The gas market hasn’t seen quite this level of volatility in a decade or more. Why now and what are the fundamentals behind it? With the coldest, highest-demand months still ahead, today’s blog provides an update of the gas supply-demand balance driving the recent price volatility.
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Fear and Loathing, Encore Edition - With Brutally Bearish Fundamentals, How Low Could Natural Gas Prices Go?
It’s been a devastating few weeks for the natural gas market. Sure, Shale Era abundance was supposed to keep gas prices from skyrocketing — and it generally has. But seriously? Henry Hub gas sinking below $2/MMBtu — and staying there, in the depths of the winter heating season? Prices have stabilized a little as a few E&Ps announced cutbacks in capex and gas-focused drilling, but gas-storage levels are abnormally high, coal-plant retirements have trimmed opportunities for coal-to-gas switching, and any significant gains in LNG exports aren’t going to happen until this time next year. With all that, you’ve gotta ask — as we do in today’s RBN blog — how low could natural gas prices go?
