Natural Gas Prices Fall despite Higher Demand

Natural gas prices

On November 20, 2017, December US natural gas futures closed at $3.05 per MMBtu (million British thermal units), and Henry Hub natural gas spot prices settled at $3.05 per MMBtu, below the $3.12 per MMBtu posted on November 13, 2017.

Natural Gas Prices Fall despite Higher Demand

The EIA’s (US Energy Information Administration) latest short-term energy outlook report suggests the average Henry Hub natural gas spot price in 2018 might be $3.10 per MMBtu, almost 3% above the $3.01 per MMBtu average estimate in 2017. Higher expected natural gas consumption and exports in 2018 have prompted the EIA to forecast a higher average price.

In spite of cool weather and a lower supply, natural gas prices fell on November 20. Natural gas producers such as Southwestern Energy (SWN) and Antero Resources (AR) might be impacted if natural gas prices fall.

Effect on coal producers

Weak natural gas prices may encourage utilities to prefer natural gas to coal, which could cause a drop in market share for coal (KOL) producers such as Arch Coal (ARCH) and Natural Resource Partners (NRP). In contrast, their market share may increase with strong natural gas prices. In the next part, we’ll look at crude oil prices during the week ended November 17.