Natural gas prices
Between July 11 and July 18, natural gas spot prices at Henry Hub fell about 4.2% to $2.72 per MMBtu (million British thermal units). According to the EIA (Energy Information Administration), this decline in prices resulted from higher production or supply of natural gas.
Last week’s natural gas prices declined by $0.12, which kept prices well below the $3 per MMBtu level. Lower natural gas prices remain highly favorable for companies (MXI) such as CF Industries (CF), Mosaic (MOS), CVR Partners (UAN), and Nutrien (NTR). Last week, RBC upgraded CF Industries, citing a favorable energy environment as one of the reasons.
According to the EIA’s July short-term energy outlook report, natural gas prices at Henry Hub are estimated to average $2.99 per MMBtu in 2018 and are expected to remain stable over the next year with the average price increasing slightly by 1.6% to $3.04 per MMBtu in 2019.
The outlook of energy prices suggests that input costs for nitrogen producers could remain stable in the near term. This outlook along with rising fertilizer prices should benefit companies’ margins. Fertilizer companies are set to release their second-quarter earnings next month, and we’ll get a better picture when earnings are released.