3 min read

The Gas Price Rally That Never Happened...

By 5 on February 26, 2021

Valentine’s Day may warm our hearts, but it often coincides with some of the coldest weather of the winter, and this year was no exception. Last week, Valentine’s Day weekend was followed by Presidents Day, which means that gas traders must make their purchases for the long weekend on Friday to cover the next four days. The weather forecast on that Friday pointed to record cold temperatures across most of the midcontinent and extending into south Texas. The expectation of cold temperatures and high heating demand over the long holiday weekend started to produce volatility in natural gas markets as early as Friday afternoon.

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Topics: Markets Natural Gas
4 min read

Rising Temps, Falling Prices

By 5 on January 27, 2021

The price for this winter’s natural gas has seen its fair share of volatility over the past 12 months. Coming out of last winter’s abnormally warm weather, prices for the 2021 calendar year strip saw its all-time low of $2.27 per MMBtu on Friday, March 6, 2020. This was the last trading session before the Saudi Arabia and Russia feud over cutting crude supplies at the beginning of the coronavirus pandemic. Since last March, natural gas prices saw two sustained bull markets where prices rallied more than 50¢, from April through May, and then again from late July through the end of October. These two rallies are highlighted in Figure 1.

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Topics: Markets Natural Gas
2 min read

It's Official, LNG is Back, Baby!

By 5 on December 22, 2020

Global LNG (Liquified Natural Gas) prices, similar to global crude prices, have struggled this year. The price of West Texas Intermediate Crude (crude oil’s benchmark index) bottomed out at -$37 per barrel on April 20th, rebounded by June to approximately $30, and then recovered to about $40 per barrel for most of the summer. While LNG’s Japan Korea Marker (JKM, a major LNG index) significantly decreased, it did not go into negative territory like crude oil. However, unlike crude oil, the JKM index had a much longer sustained low, and when including the cost to liquify the natural gas, the price for LNG was essentially negative.

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Topics: Markets Natural Gas
3 min read

Gas Prices Have Plummeted (This is a Big Deal)

By 5 on November 24, 2020

Throughout the year, analysts wrestled with many variables as they tried to forecast the End of Season (EOS) natural gas storage levels, which were reported by the U.S. Energy Information Administration (EIA) in the first week of November. The amount of gas in storage was impacted by the following:

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Topics: Markets Natural Gas
3 min read

Fundamental & Technical Analysis for 2021

By 5 on October 29, 2020

The rise in the futures price for the 2021 NYMEX Henry Hub natural gas contract has been driven by one major fundamental driver - the steady decline in natural gas production over the last 10 months. Figure 1 shows that in November 2019 the EIA reported a record high average daily production of dry natural gas of 96.2 billion cubic feet (Bcf) per day. In September 2020 the daily average production fell to only 87.1 Bcf/day, a decrease of 9.4%. Even with a decline in gas production, the mild winter last year and the demand destruction from coronavirus has created a situation where there will likely be record levels of natural gas in storage.

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Topics: Markets Natural Gas
4 min read

How Today’s Hurricanes Impact Natural Gas Prices

By 5 on September 24, 2020

Once upon a time, major hurricanes in the Gulf of Mexico had the potential to wreak havoc on natural gas markets and send prices soaring to levels that are 4X what they are today. Late last month, as Hurricane Laura was heading toward major gas production centers, many were asking if gas prices would turn bullish and increase because of the impact to natural gas supplies. If this were 2005, the answer would have been a definitive “yes.” But today, the correlation of natural gas prices and hurricanes in the Gulf of Mexico is not what it was fifteen or even ten years ago. There are several reasons for this change.

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Topics: Markets Natural Gas
3 min read

Natural Gas Tea Leaves

By 5 on August 27, 2020

Tasseography is a fancy word for fortune-telling by reading tea leaves. Humans often search for patterns in hopes of predicting the future just as we do with financial markets. While serious investors would never resort to reading tea leaves, technical traders and fundamental analysts look for patterns and trends to better understand and anticipate market movement.

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Topics: Markets Natural Gas
3 min read

The Good News Bears vs. The Bad News Bulls

By 5 on July 30, 2020

The past 12 months have been a wild ride for natural gas producers. Going into last winter, storage was near the 5-year average. And while prices were not great, they were at least near most producer’s costs and most natural gas producers were focused on how to continue to increase production. Recently, those ideas have dramatically changed. A mild winter put significant downward pressure on prices as production was strong, demand was moderate and storage inventory levels were high.

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Topics: Markets Natural Gas
2 min read

A Crude Awakening Pushes Down Gas Prices

By 5 on June 24, 2020

The US Energy Information Administration (EIA) and many in the energy industry were predicting a significant decrease in natural gas production through the rest of this year and into the first quarter of 2021. Some of this forecasted production decline was due to very low spot and short-term market prices for natural gas. Another significant driver of this expectation was the anticipated decline in gas coming from large crude oil reserves, such as the Permian Basin. However, the recent recovery of crude oil prices has changed this outlook.

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Topics: Markets Natural Gas
3 min read

Crude is Up and Gas is Down (A Little)

By 5 on May 28, 2020

Last month, we reported that while short-term crude prices were near 20-year lows, natural gas futures prices for the year 2021 were reaching 24-month highs. The rally in natural gas prices in 2021 was primarily driven by the fear that a slowdown in crude oil production from reserves, such as the Permian Basin, would produce less natural gas, which is a by-product of the crude oil extraction process. 

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Topics: Markets Natural Gas