Short-Term Outlook For U.S. Natural Gas Prices, January 2017
Isn’t this fun? The roller coaster ride continues.
We’ve seen a surge up until the mid-$3.90s at the end of December, then a collapse down to a $3.10 close Monday, and now up closer up to $3.30 again. The run up for the end of the year can be attributed to thin trading during the holiday season, and we are now settling back into reality with warmer forecasts and reduced res/comm demand expected – a sector that has been providing 80-90% of new gas demand this winter.
As of yesterday, EIA now stands at $3.55 for gas prices for 2017, a substantial increase from the $2.50 price for 2016. EIA’s new projection for the 2017 Henry Hub is about 10% higher than what it projected last month. Although yesterday’s move up of 20 cents or so was aggressive, it was only a one day move. With all factors considered, the market is beginning to show signs of indecisiveness. Perhaps a trading range is on the horizon. A $3.00-3.50 range for 2017 overall is what many banks and producers (indicated by their hedging positions) have forecast.
Interestingly, I’m also starting to see some Integrated Resource Plans factoring in $4 gas through 2030. More likely, EIA now has gas staying below $6 for as far as the eye can see, compared to $8 or $9 projections we saw just a few years ago.
Article Written by Jude Clemente at Forbes.com