Lately, natural gas prices have experienced high volatility primarily due to the swing in weather in North America. Natural gas is heavily traded at the Henry Hub in the US. Let’s look at what last week meant for the prices at Henry Hub.
Following a peak of $5.46 per MMBtu a week ago, natural gas prices at the Henry Hub settled at $3.5 per MMBtu last week on January 24. The EIA stated that the natural gas prices between the week of January 17 to January 24 fell at most of the locations in the US. Notably, the working gas stock last week was 18% lower year-over-year at 2,296 Bcf (Billion cubic feet).
Outlook on prices
In its short-term energy outlook report issued on January 9, 2018, the EIA forecast natural gas spot prices at Henry Hub to average $2.88 per MMBtu (million British thermal units). The prices in 2019 are expected to increase by 1.4% to $2.92 per MMBtu.
These forecasts suggest that the next two years could show support for nitrogen fertilizer producers (XLB) such as CF Industries (CF), Terra Nitrogen (TNH), Nutrien (NTR), and CVR Partners (UAN). It is important for natural gas prices to remain low in order for these fertilizer companies to compete with coal-based nitrogen producers in China.
In the next part, we will discuss the prices of phosphate fertilizers.