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


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



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.

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LOL!  The good news is that my usage of natural gas is going down fast.  The furnace hasn't run in a while.

If you really want to get energized, do the math and find out how much CP or your gas provider charges you per MCF at your house.  No, it is not on the bill.  It is measured in therms for "convenience".  I believe it is presently at least $30/MMCF if not more.  

Ugh!  For whose convenience?

Oh I'm sure its a stupid high number.  My CP bill is usually only about $32 a month, but it's worth it, as I have a gas clothes dryer, water heater, furnace and stove. keeps my NRG bill from getting too high!

A therm is 100,000btu's.  Assuming I have all the decimals in the correct place,   1 MCF is approximately 1,000,000 BTU's (MM BTU) so it should be 10 therms per MM BTU.

BTW my gas bill and all associated charges (i.e delivery) are in CCF (hundred cubic feet) which is one therm.

The July monthly settlement price falls $2.357, from $8.908 to $6.551.

6.551 is not 8.908 but it's better than July 21 3.84, July 20 1.77, July 19 2.37, July 18 2.83......I had no clue how much money I was losing when those mean tweets were flying around!

We may fall below $6 mcf soon but the Futures forward strip predicts monthly prices between $4 and $5 for years into the future.  Of course that depends on companies not over producing and avoiding a recession.  Both of which could put us right back at $3 in a year.

Overproducing is a long way off in my opinion.  With Europe in dire straits for energy they will take all of the LNG we can ship them.  This combined with many companies not willing or not being allowed to pick up rigs will keep the supply side down while the demand side keeps going up.  This is called the perfect storm.  

I agree but I think that a recession is the greater possibility to impact oil.  Even if the US avoids the brunt of a recession, global demand could be significantly reduced.  Of course less oil production means less associated gas which bolsters Haynesville nat gas prices.

The monthly settlement price for August is $8.687.  The average monthly settlement price to date for 2022 is $6.451


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