2021 U.S. Natural Gas Monthly Settlement Prices
AVERAGE MONTHLY PRICE FOR 2021: $3.841
2022 U.S. Natural Gas Monthly Settlement Prices
YEAR-TO-DATE AVG: $6.644
2023 U.S. Natural Gas Monthly Settlement Prices
YEAR-TO-DATE AVG: $2.737
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.
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.
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.
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.
LOL! You've got me beat. I've never owned a slide rule and wouldn't know how to use one if I did. I have seen other operators ignore no cost royalty clauses on multiple wells. It's almost as if those companies hope you don't notice that your royalty should not be subject to post production deductions. Your modest acreage in the Keydets shouldn't take away from your net price calculations. It is likely the same per mcf regardless of tract acreage. If XTO straightened it out before hopefully they will do so again. Soon.
Just wanted to let y’all know I wasn’t ignoring you. I’ve been trying to plan some other stuff lately. It looks like NGE got you all lined out. I may need to grab my lease agreement and mast last stub and take it to an O&G attorney and make sure we’re all good. Maybe I’ll just skim over it myself and see if anything jumps out at me first. I talked to a real good guy along while back over on the west side of Houston and it seems like if he would have seen anything untoward he would have pointed it out. Anyway, getting off the topic of this thread now. Y’all have a good one!
The Henry Hub settlement price for Oct. is $2.764 and the year to date average monthly price is $2.697.
The settlement price for Oct. 2022 was $6.868.
XTO paid for August:
$2.22 MMBtu BSI KEYDETS DU #H1
$2.10 MMBtu BSI KEYDETS B 01
$2.24 MMBtu KEYDETS A-47 4H
Thanks. These platforms often provide historical data and charts as well.
November monthly settlement price: $3.164. Average monthly settlement price through Nov. - $2.740.
The monthly settlement price does not vary from day to day. It is the price for the volume contracted for the calendar month. The futures price varies from day to day but that is not physical gas sales, that is paper trades. The spot price also varies from day to day but very little gas is sold on the spot price. If an end user contracts to buy x mcf of natural gas for a specific month at the monthly settlement price and then runs short the last few days of the month, they can buy what they need to finish out the month on the spot market.
December monthly settlement price: $2.706. Average monthly settlement price for 2023: $2.737.
thanks Skip for providing this all year.
You're welcome, RONNY. Hoping for better prices in 2024.