Saturday, May 31, 2025

Latest

Natural Gas Prices Continue To Plummet With No Turning Point In Sight

U.S. natural gas prices continue to fall; benchmark Henry Hub prices crossed through US$2.61 per thousand cubic feet (Mcf) on January 31, the lowest level since April 2021. Warm weather in gas-consuming regions, record U.S. gas production, and a supply crunch in Europe which has proved to be far less problematic than feared (due to extremely mild winter weather throughout much of Europe), are the primary culprits for the grinding decline in the price of this commodity over the last seven weeks.

Source: Trading Economics.

Importantly, mild weather conditions on both sides of the Atlantic are generally expected to persist for the next few weeks of winter, which are historically very high consumption weeks, and U.S. natural gas production is expected to increase around 7% in 2023 from the current level of about 100 billion cubic per day (Bcf/d). In simple terms, demand may ebb from annual norms while supply increases — a prescription for further price declines.

READ: Natural Gas Prices Collapse After A Dramatic 2022

Gas storage data also seem to point to lower gas prices. According to the U.S. Energy Information Administration (EIA), total working gas in U.S. underground storage was 2,729 Bcf as of January 20, 2023. This represents 128 Bcf, or 4.9%, more than the five-year average storage level of 2,601 Bcf at the same point in the year.

Furthermore, analysts expect a draw of 138 Bcf for the week ended January 27, 2023, versus a historical average pull of 181 Bcf and 261 Bcf in an especially cold week last year. If the consensus holds, U.S. gas in storage would fall to 2,591 Bcf, but that implies the country’s surplus gas in storage versus historic averages would rise to 171 Bcf, or 7.0%. (While not necessarily predictive of the January 27 draw, 91 Bcf was withdrawn in the week ended January 20, far short of the historic norm of 185 Bcf.)

Given all this, plus the dwindling number of weeks left in winter, analysts at The Schork Report project that the quantity of gas in storage at the end of winter to be around 1,784 Bcf, far ahead of the 2022 figure of 1,382 Bcf. Such a huge storage delta would seem certain to put additional pressure on natural gas prices.

As an aside, European natural gas storage levels are well above average too — despite dramatic reductions in gas supplied from Russia. European storage was about 74% full as of January 30 versus a five-year average of 54%.

Investors may consider decreasing exposure to gas-oriented E&P companies. While the stocks may trade at marked P/E or price-to-cash flow discounts to the overall market, the pressure of continued weakness in the underlying commodity may be too difficult to overcome.


Information for this story was found via Energy News, Trading Economics, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

How To Profit From $3300 Gold? An Inside Look At A Massive 300,000 Oz Project | Martino De Ciccio

We’re At The Start of a Great Silver Boom | Ross McElroy & Andy Bowering – Apollo Silver Corp

Equinox Gold Q1 Earnings: When Everything Goes Wrong

Recommended

ESGold Begins Concentration Tests Ahead Of First Production

Sterling Metals Hits 0.21% Copper Over 482.8 Metres In First Drilling At Soo Copper project

Related News

Natural Gas Prices Soar On Worldwide Basis; Margins Expected To Be Impacted Across Variety of Industries

Over the last few months, investors have increasingly focused on supply shocks caused by COVID-19...

Tuesday, September 28, 2021, 03:47:00 PM

EU Continues to Delay Nord Stream 2 Approval While Global Energy Crisis Escalates to Brazil and India

It’s official: natural gas prices have gone completely mad. Gas prices in Europe hit yet...

Tuesday, October 5, 2021, 10:15:00 AM

Commodity Trader Trafigura Warns Europe’s Depleted Gas Reserves Could Create Rolling Blackouts This Winter

Swiss-based commodity trading giant Trafigura Group has warned that Europe’s severely depleted natural gas reserves...

Tuesday, November 16, 2021, 05:14:00 PM

The Arbitrage Opportunity of the Century: Natural Gas Shipments From the US to the EU

You know what they say, never let a good conflict go to waste! With Russia...

Sunday, August 7, 2022, 09:00:00 AM

Montreal Bans Natural Gas, Propane Hookups In New Builds

Montreal’s latest environmental move is set to alter the urban landscape. The city’s executive committee...

Sunday, October 29, 2023, 07:22:00 AM