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Natural Gas Prices Impacted Nitrogen Fertilizers Last Week

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Natural gas prices

The average weekly natural gas prices at Henry Hub for the week ending November 17 moved higher week-over-week. For most of this year, the natural gas prices at Henry Hub have been relatively stable compared to the levels last year.

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Weekly movements

Last week, the average weekly prices for natural gas rose as much as 12% week-over-week to $3.12 MMBtu (million British thermal units) from a weekly average of $2.78 MMBtu the previous week. Higher demand for gas driven by colder weather and a dip in the supply usually pushes natural gas prices higher.

Last week, the total US natural gas supply stood at 82.2 Bcf/d (billion cubic feet per day), which rose 1.5% week-over-week from 81.0 Bcf/d a week ago. Compared to the levels in the same week a year ago, last week’s natural gas supply rose 8% from 76.1 Bcf/d.

Outlook

In its recent Short-Term Energy Outlook report, the EIA (U.S. Energy Information Administration) forecast that the natural gas prices in 2017 would average $3.01 per MMBtu and $3.10 per MMBtu in 2018.

Lower energy prices in the US benefited producers (XLB) like CF Industries (CF), Terra Nitrogen (TNH), and CVR Partners (UAN). Lower prices helped them maintain a lower production cost for nitrogen fertilizers. In contrast, PotashCorp (POT) has its nitrogen operations in Trinidad. It has seen availability constraints.

In the next part, we’ll discuss phosphate fertilizers.

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