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
DEC: $3.431
YEAR -TO-DATE AVG: $2.269
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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.
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William, Henry Hub was chosen by the energy media long ago to be the representative price that they use to gauge and write about natural gas prices. When it comes to Haynesville Shale gas, most is not sold at Henry. In the west half of the Louisiana fairway the bulk goes to Carthage, Tx, a long time natural gas hub for our area, and in the east, it goes to Perryville. You'll hardly ever hear those hubs mentioned, always Henry. It most cases, the hubs act as a basis price that is used to negotiate the buying and selling of physical gas volumes at those hubs. The sales price is usually some discount to the hub price. When modeling well payouts, I use Henry because it is easy to find monthly prices going back years. I then discount the Henry Hub price and then after getting the sum of the price and monthly volume, I discount again to account for the post production deductions that all Haynesville operators charge their mineral owners. It's arbitrary but the only way to attempt to get some idea of where wells are on their paths to payout.
September monthly settlement price: $1.930. Average monthly settlement price for 2024: $2.097.
October monthly settlement price: $2.585. Average monthly settlement price for 2024: $2.146.
Got pencil whipped for this month. Paying 1.61 for August production. Chesapeake must be selling at the El Cheapo Hub.
How about deductions for marketing? Does your statement include a charge per mcf? Here is how CHK/EXE is weathering the low price cycle.
See page 3 for the DTIL (Delayed Turn In Line) and DUC (Drillled, Uncompleted) data and Page 8 for the Hedge position.
https://investors.expandenergy.com/static-files/69ed138a-617f-4bb1-...
This was a no cost lease. They have not tried to sneak in more. Yet…..
CHK selling NG to itself. Same old BS.
November monthly settlement price: $2.346. Average monthly settlement price for 2024: $2.164.
December monthly settlement price: $3.431. Average monthly settlement price for 2024: $2.269.
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
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AboutAs exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More |
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