Cash natural gas prices at the US benchmark Henry Hub sank to their lowest since the early 1990s in March 13 trading as mild weather and rising inventory levels keep the Gulf Coast market oversupplied.
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Register NowIn mid-session trading, next-day gas prices at the Henry Hub were moving around $1.24/MMBtu, with even lower prices recorded at other Gulf Coast hub stretching from the Florida panhandle to the shores of South Texas, data from Intercontinental Exchange showed.
According to historical data from S&P Global Commodity Insights, cash prices at most Gulf Coast hubs March 13 were trading near lows last seen in the early 1990s. At the Henry Hub, prices were even lower than those recorded in 2020 when the global coronavirus pandemic fueled a fallout in US and international commodity prices.
Across the wider US Southeast market, prices were down some 20-30 cents on the day as regional weather forecasts point to unusually mild temperatures, weak demand and an all-but-certain end to the South Central storage withdrawal season.
Spring weather
Over the next several days, already mild temperatures along the Gulf Coast are projected to continue warming. In New Orleans, daily highs are forecast to rise into the upper 70s through mid-month, reaching 80 degrees Fahrenheit on March 16. In Houston, daily highs already in the low-80s F are expected to continue into the upcoming weekend, according to recent forecasts published by AccuWeather.
At the regional level, the Southeast population-weighted temperature is expected to trend about 9 degrees above the 61 F average typical of mid-March, data from S&P Global Commodity Insights showed. According to the same weather and demand forecast, regional gas demand will trend about 1.2 Bcf/d below average March 14-16, before cooler weather begins lifting demand.
Storage
With relatively mild weather forecast to persist across the Southeast through late March, many market analysts now expect that the 9 Bcf withdrawal from South Central inventory, reported by the US Energy Information Administration in the week to Feb. 23, will likely be the last until mid-summer.
According to a regional storage outlook published by S&P Global, the US South Central should post a 24 Bcf injection for the week to March 8 followed by a 16 Bcf injection for the week to March 16.
Outlook
Despite overwhelmingly bearish sentiment in the Henry Hub cash market, gas futures prices on the NYMEX were down just 5-6 cents in March 13 trading with the April gas contract settling just under $1.66/MMBtu, data from CME Group showed. Over the past week, the front-month contract has lost roughly 30 cents, or more than 15%, but has continued to trade above historic lows around $1.50 recorded in mid-February, data from S&P Global showed.
In the forward gas market, the Henry Hub balance-of-month contract tumbled to just $1.54 at market close March 12 – just 2-3 cents above the cash market settlement. Assuming that modest premium holds, the Henry Hub balmo price could well settle at its lowest on record by market close March 13.