US Monthly Spot Gas at 30-Year Low: EIA
Monthly spot natural gas prices at Henry Hub, the US benchmark, fell to their lowest in more than 30 years in June, the Energy Information Administration (EIA) said July 13 in its Today in Energy report.
In the first six months of the year the monthly average for spot trades at the hub in Louisiana was $1.81/mn Btu, while in June, the spot price averaged just $1.63/mn Btu, the lowest monthly inflation-adjust price since at least 1989, the agency said. The daily price at Henry Hub reached its lowest level in more than 20 years on June 16, settling at $1.38/mn Btu.
“Prices started the year low because of mild winter weather, which resulted in less natural gas demand for space heating,” the EIA said. “Beginning in March, spring weather and the economic slowdown induced by mitigation efforts for the coronavirus disease 2019 (Covid-19) contributed to lower demand, further lowering prices.”
Warmer temperatures in Q1 left gas in storage at the end of the heating season (March 31) at higher than average levels, and injections so far in the summer injection season (April through October) have continued relatively high, the EIA said.
Contributing to high storage levels and weak prices has been a collapse in US LNG exports, which have fallen by half since the start of the year, to less than 4bn ft3/day in June from 9.8bn ft3/day in March. US industrial demand for gas was also down nearly 3% through the first half.
Despite the gloomy price performance so far this year – and likely to continue through the summer – the EIA sees some chance of recovery later this year, as low prices lead to additional production declines. After averaging less than $2/mn Btu in each month from February through June, the EIA is forecasting a second half average of $2.05/mn Btu.