U.S. NATURAL GAS MONTHLY SETTLEMENT PRICE TRACKER
2021 U.S. Natural Gas Monthly Settlement Prices
JAN: $2.467
FEB: $2.760
MAR: $2.854
APR: $2.586
MAY: $2.925
JUN: $2.984
JUL: $3.617
AUG: $4.044
SEP: $4.370
OCT: $5.841
NOV: $6.202
DEC: $5.447
AVERAGE MONTHLY PRICE FOR 2021: $3.841
2022 U.S. Natural Gas Monthly Settlement Prices
JAN: $4.024
FEB: $6.265
MAR: $4.568
APR: $5.336
MAY: $7.267
JUN: $8.908
JUL: $6.551
AUG: $8.687
SEPT: $9.353
OCT: $6.868
NOV: $5.186
DEC: $6.712
YEAR-TO-DATE AVG: $6.644
2023 U.S. Natural Gas Monthly Settlement Prices
JAN: $4.709
FEB: $3.109
MAR: $2.451
APR: $1.991
MAY: $2.117
JUN: $2.181
JUL: $2.603
AUG: $2.492
SEP: $2.556
OCT: $2.764
NOV: $3.164
DEC: $2.706
YEAR-TO-DATE AVG: $2.737
2024 U.S. Natural Gas Monthly Settlement Prices
JAN: $2.619
FEB: $2.490
MAR: $1.615
APR: $1.575
MAY: $1.614
JUN: $2.493
JUL: $2.628
AUG:$1.907
SEP: $1.930
OCT: $2.585
NOV: $2.346
YEAR -TO-DATE AVG: $2.164
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U.S. market mechanisms
The natural gas market in the United States is split between the financial (futures) market, based on the NYMEX futures contract, and the physical market, the price paid for actual deliveries of natural gas and individual delivery points around the United States. Market mechanisms in Europe and other parts of the world are similar, but not as well developed or complex as in the United States.
Futures market
The standardized NYMEX natural gas futures contract is for delivery of 10,000 million Btu of energy (approximately 10,000,000 cu ft or 280,000 m3 of gas) at Henry Hub in Louisiana over a given delivery month consisting of a varying number of days. As a coarse approximation, 1000 cu ft of natural gas ≈ 1 million Btu ≈ 1 GJ. Monthly contracts expire 3–5 days in advance of the first day of the delivery month, at which points traders may either settle their positions financially with other traders in the market (if they have not done so already) or choose to "go physical" and accept delivery of physical natural gas (which is actually quite rare in the financial market).
Most financial transactions for natural gas actually take place off exchange in the over-the-counter (OTC) markets using "look-alike" contracts that match the general terms and characteristics of the NYMEX futures contract and settle against the final NYMEX contract value, but that are not subject to the regulations and market rules required on the actual exchange.
It is also important to note that nearly all participants in the financial gas market, whether on or off exchange, participate solely as a financial exercise in order to profit from the net cash flows that occur when financial contracts are settled among counterparties at the expiration of a trading contract. This practice allows for the hedging of financial exposure to transactions in the physical market by allowing physical suppliers and users of natural gas to net their gains in the financial market against the cost of their physical transactions that will occur later on. It also allows individuals and organizations with no need or exposure to large quantities of physical natural gas to participate in the natural gas market for the sole purpose of gaining from trading activities.
Physical market
Generally speaking, physical prices at the beginning of any calendar month at any particular delivery location are based on the final settled forward financial price for a given delivery period, plus the settled "basis" value for that location (see below). Once a forward contract period has expired, gas is then traded daily in a "day ahead market" wherein prices for any particular day (or occasional 2-3-day period when weekends and holidays are involved) are determined on the preceding day by traders using localized supply and demand conditions, in particular weather forecasts, at a particular delivery location. The average of all of the individual daily markets in a given month is then referred to as the "index" price for that month at that particular location, and it is not uncommon for the index price for a particular month to vary greatly from the settled futures price (plus basis) from a month earlier.
Many market participants, especially those transacting in gas at the wellhead stage, then add or subtract a small amount to the nearest physical market price to arrive at their ultimate final transaction price.
Once a particular day's gas obligations are finalized in the day-ahead market, traders (or more commonly lower-level personnel in the organization known as, "schedulers") will work together with counterparties and pipeline representatives to "schedule" the flows of gas into ("injections") and out of ("withdrawals") individual pipelines and meters. Because, in general, injections must equal withdrawals (i.e. the net volume injected and withdrawn on the pipeline should equal zero), pipeline scheduling and regulations are a major driver of trading activities, and quite often the financial penalties inflicted by pipelines onto shippers who violate their terms of service are well in excess of losses a trader may otherwise incur in the market correcting the problem.
Basis market
Because market conditions vary between Henry Hub and the roughly 40 or so physical trading locations around United States, financial traders also usually transact simultaneously in financial "basis" contracts intended to approximate these difference in geography and local market conditions. The rules around these contracts - and the conditions under which they are traded - are nearly identical to those for the underlying gas futures contract.
Derivatives and market instruments
Because the U.S. natural gas market is so large and well developed and has many independent parts, it enables many market participants to transact under complex structures and to use market instruments that are not otherwise available in a simple commodity market where the only transactions available are to purchase or sell the underlying product. For instance, options and other derivative transactions are very common, especially in the OTC market, as are "swap" transactions where participants exchange rights to future cash flows based on underlying index prices or delivery obligations or time periods. Participants use these tools to further hedge their financial exposure to the underlying price of natural gas.
Views: 22846
Replies to This Discussion
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Permalink Reply by Mister Sunday on -
I agree! I was only answering Hale Yayuh's querie on whether the one statement was about the price or the well.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Thanks.
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Permalink Reply by Mister Sunday on
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I can't tell you what XTO gave for NG in October as there was no production for me.
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Permalink Reply by M B Gilster on
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FWIW my Oct XTO ranged from 5.23 - 5.34
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Permalink Reply by Skip Peel - Mineral Consultant on
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Now starting 2022: JAN - $4.024
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Permalink Reply by Skip Peel - Mineral Consultant on
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As we track monthly settlement prices in 2022, it is worth keeping in mind that Haynesville operators are making pretty impressive profits at $3 gas. To maintain a reasonably stable price spread throughout the seasons, prices should remain above $3 but not exceed ~$3.75/mcf for long. Short term spikes are to be expected but to keep demand strong, the price can't get too high for long. An average monthly price for all of 2022 of ~$3.50 would be ideal.
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Permalink Reply by Skip Peel - Mineral Consultant on
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NYMEX February gas futures price surges $2 in technical move as contract expires
spglobal.com
Highlights
February contract ends trading at $6.265/MMBtu
Fundamentals not central in market move: analysts
Natural gas futures prices at the US Henry Hub notchedtheir largest single-day gain since the 1990s in Jan. 27 trading as the expiring February contract surged on a likely technical market move, analysts said.
In late-session trading, the February gas contract climbed as high as $7.40/MMBtu before expiring at $6.265/MMBtu marking a nearly $2 price increase from the prior-day settlement.
Market analysts were in agreement that the move was likely a technical one.
"I don't think anything in the fundamentals shifted so dramatically to cause that move," Daniel Myers, senior market analyst at Gelber & Associates, said by telephone Jan. 27.
"We saw it accelerate in the last 30 minutes of trading – it was mostly a financial phenomenon, rather than a reflection of what is happening in the physical market," Myers said.
Stephen Schork, principal of the Schork Report, agreed. "This is a classic short squeeze," he said.
"Clearly you've got somebody or a lot of somebodies on the wrong side of the trade," Schork said. "Who's to say that it isn't a hedge fund that had a massive position, but clearly it was the all-time squeeze of squeezes."
Steep backwardation along the NYMEX futures curve also offered support for a technical interpretation of the Jan. 27 market move. Futures prices for March, April and May settled in a relatively tight range from the mid-$4.20s to the mid-$4.30s/MMBtu – a gain of just 20-25 cents on the day, data from CME Group and S&P Global Platts showed.
Jay Levine, independent analyst and principal at EnerJay, noted the relevance of the February contract's expiration date on Jan. 27 – a key factor that likely played a critical role in the market's sharp move.
"Someone was net short on February natural gas on termination date – they have to either make delivery or cover," Levine said.
While analysts were in agreement over the mainly technical causes of the market's move, supply-demand fundamentals have also been on shifting ground recently.
Supply, demand
Updated forecasts from the National Weather Service on Jan. 27 showed colder temperatures enduring into mid-January keeping heating demand elevated as domestic production weakness continues and US inventory levels dwindle.
Over the next week, the weather service forecast shows a 50% to as much as 80% probability for below-average temperatures across a wide swatch of the central US, Texas and the Southeast in a forecast reminiscent of last winter's polar vortex event.
In the agency's eight- to 14-day forecast, the colder weather is expected to shift east, with slightly lower probabilities for sub-normal temperatures in the Northeast and along the Eastern Seaboard states.
Weaker gas production recently could also keep the domestic market in tight supply over the days ahead as colder weather and strong heating demand continue. After tumbling at the start of the new year, US gas production is down over 4 Bcf/d from its December high to average just 92.2 Bcf/d this month. More recently, output has continued sputter into the mid-91 Bcf/d range as freeze-offs in the Permian and the midcontinent exacerbate the decline.
The Energy Information Administration on Jan. 27 also announced its largest withdraw yet of the current heating season at an estimated 219 Bcf pulled from inventory. The current forecast shows outsized withdraws continuing over the next two weeks, potentially cutting stocks to a more than 190 Bcf deficit to the five-year average by early February, data from S&P Global Platts Analytics shows.
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Permalink Reply by w.r. frank on
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I thought it would be $5.90 based on yesterday's close.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Daily closes are for futures prices. They tend to vary quite a bit over short periods of time and they are basis prices for paper trades, not the sales of physical gas molecules. Through February, the EIA's projection for average monthly 2022 gas prices of $4 looks to be on target. If the weather supports prices at these levels for another month, $4 may look pretty solid.
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Permalink Reply by Mister Sunday on
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Again, no production from my wells, so I can't tell you what XTO gave for November '21
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Permalink Reply by Skip Peel - Mineral Consultant on
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AVERAGE PRICE PER MCF FOR FIRST QUARTER 2022: $4.952
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