TPI Market Snapshot header
TPI Takeaway | Market Snapshot

Mild weather and impressive storage numbers keep the natural gas price low.

GAS KEEPS DROPPING IN MILD WEATHER, AND SURPLUS STORAGE

Henry Hub Natural gas futures
Henry Hub Natural gas futures

NATURAL GAS STORAGE IS NOW 16.8% HIGHER THAN LAST YEAR.

  • Weaker than average withdrawals have contributed to solid storage reports. We now have 16.9% more gas in storage than we did a year ago and 8.8% more in storage than the five-year average.
  • With gas dropping closer to the $2.00 mark, don’t be surprised if we soon see a drop in natural gas rigs to halt the decline in natural gas pricing.

What Is Henry Hub?

Henry Hub is a natural gas pipeline in Erath, Louisiana, that serves as the official delivery location for futures contracts on the New York Mercantile Exchange (NYMEX). 

NATURAL GAS STORAGE REPORT

Natural Gas Storage Report: EIA
Natural Gas Storage Report EIA
  • Due to mild weather and robust storage reports, the gas market dropped to $2.26 over the weekend. We now have 16.9% more gas in storage than last year and 8.8% more than the five-year average.
  • The market in the last nine months has dropped by almost $6.00. What was priced at $9.04 in mid-June 2022 is now $2.26 in February 2023. This difference in market forecasts begins to narrow next year. The “new normal” next year looks to be about $4.00 except in winter, when it will typically rise to $5.00
  • Producers may consider cutting production back from the near-record level, as they have been at around 102 Bcf/d. This week alone, the number of dry rigs in the Lower 48 is down eight. If the price continues to drop, look for more production cutbacks.

A BIT OF COOLER AIR IS MOVING IN FROM THE NORTHEAST

US Weather Map Forecast
US Weather Map Forecast

Cold weather from Western Canada will bleed into the Western United States and push that cooler weather into the Midwest. There is also some cooler air moving into New England from Canada that should increase natural gas demand.

FORWARD POWER PRICING

Forward Power Pricing:
Forward Power Pricing BGE RTC

Wholesale electricity pricing in the BGE Hub and the AD Hub has dropped below future years, with 2023 now cheaper than ‘24, ‘25, and ‘26.

Market prices reflect the currently low gas market and a forecast of $4.00-$5.00 gas as the new normal in future years.

Forward Power Pricing: PJM Ad Hub
Forward Power Pricing PJM Ad Hub