Living in Fast Forward Curves – Making Sense of Forward Natural Gas Markets
Six months ago, the natural gas forward price for 2021 averaged $5.15/MMBtu. Back then a producer could hedge forward production at that price. Today 2021 is only $4.63/MMBtu, a decline of $0.52/MMBtu even though we are now in the middle of the winter. Today the forward market doesn’t get above $5.00/MMBtu until 2026, certainly a disappointment for many a producer that didn’t hedge last summer. What does the market know about the future that is different from what was known back in June? How do these forward curves work in the first place? In this new blog series on North American natural gas forward curves we will provide background on the mechanics of forward curves, examine the forward curve in each of the major regions in the North American natural gas market, and do a deep dive into natural gas historical trends, major drivers and market expectations as related to forward markets.
