US natural gas prices have fall to their lowest level since 2016. The near-month natural gas futures price at the New York Mercantile Exchange closed at $1.77 per million British thermal units (MMBtu) on February 10 – the lowest February closing price for the near-month contract since at least 2001

This is the lowest near-month futures price in any month since March 8, 2016, according to Bloomberg, LP and FRED data.

Furthermore, the daily spot price at the Henry Hub national benchmark was $1.81/MMBtu on February 10, 2020, the lowest price in real terms since March 9, 2016, according to Natural Gas Intelligence data. 

Henry Hub spot prices have ranged between $1.81/MMBtu and $2.84/MMBtu since November 1, 2019, as relatively warm winter weather has reduced demand for natural gas for heating. Natural gas production growth has outpaced demand growth, reducing the need to withdraw natural gas from underground storage.

Dry natural gas production in January 2020 averaged about 95.0 billion cubic feet per day (Bcf/d), according to IHS Markit data. It also estimates that in January 2020 the US saw the third-highest monthly natural gas production on record, down slightly from the previous two months.

However, IHS Markit estimates that overall consumption of natural gas (including feed gas to liquefied natural gas (LNG) export facilities, pipeline fuel losses, and net exports by pipeline to Mexico) averaged about 117.5 Bcf/d in January 2020, an increase of about 0.2 Bcf/d from last year. This overall increase is largely a result of an almost doubling of LNG feed gas to about 8.5 Bcf/d.

Because supply growth has outpaced demand growth, less natural gas has been withdrawn from storage withdrawals this winter. Despite starting the 2019–20 heating season with the third-lowest level of natural gas inventory since 2009, by January 17, 2020, working natural gas inventories reached relatively high levels for mid-winter. 

The US Energy Information Administration’s (EIA) data on natural gas inventories for the Lower 48 as of February 7, 2020, reflect a 215 Bcf surplus to the five-year average. In EIA’s latest short-term forecast, more natural gas remains in storage levels than the previous five-year average through the remainder of the winter.

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17th February 2020