As we approach the final month of the year, natural gas prices at Henry Hub continue to be significantly lower than last year. The Henry Hub Monthly Spot price was $2.98 in October compared to $5.66 last year. The spread between Henry Hub and local delivery prices continue to be volatile in certain areas of the country.

Domestic Demand  

During the last week of October, below-normal temperatures impacted 230 million in the U.S., with some cities experiencing record lows well below freezing. This cold spell led to increased demand for heating in both homes and businesses, surging to 24 billion cubic feet (Bcf) compared to the previous year's 17.1 Bcf. This pushed total demand in the U.S. to 108.9 Bcf per day.

International Demand      

As Europe heads into winter with its natural gas storage at 96 percent capacity, challenges still remain with limited storage and continued high natural gas prices.  After sanctions were put on imports of Russian oil and natural gas due to the war in Ukraine, Europe is dependent on importing liquified natural gas (LNG) from the U.S. and others to meet energy demands.  Although natural gas prices in Europe have dropped more than 50 percent compared to 2022 due to continued warm weather and ample storage, markets remain nervous if the weather were to turn colder than normal.

Last month, the U.S. exported over 7 million metric tons of LNG which is the second-highest month on record.  Europe purchased the highest share of U.S. LNG last month at 60 percent, followed by Asia at 20 percent and Latin America at five percent. As the Freeport LNG facility continues to reopen and new facilities come online at the beginning of 2024, the U.S. will continue to hold its title as the largest exporter of LNG, ahead of Australia and Qatar.  

Production & Supply    

Last year, U.S. storage levels were nearly four percent below the 5-year average at 3,501 Bcf heading into winter.  After a warmer-than-normal winter and continued production growth, the U.S. is entering this winter in a much better position, with storage 5.7 percent above the 5-year average at 3,779 Bcf.

With ample storage throughout 2023, this has negatively impacted prices for U.S. producers pushing them to reduce natural gas rig count by 25 percent with hopes to raise prices.  

If you have any questions regarding the information provided in this month’s newsletter or would like to discuss your enrollment options, please contact your local WoodRiver Energy sales representative today.