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Which will we see first for the Prompt Month Contract of Henry Hub Gas Futures? $3 or $3.60 NYMEX…
We haven’t been outside of this range since December 7 when the January contract closed at $3.68. On the downside, it hasn’t been below the range since September 25th at $2.92 per MMBtu. But many are hoping for a repeat of 2012 when the prompt broke $2 and the 12-month strip was below $2.60.
Have you placed your bets? Well, the chances for a repeat of 2012 appear to be quite slim. Last year boasted the warmest winter of the 20th and 21st centuries! And shale producers kept drilling even as prices plummeted, which led to a huge natural gas storage surplus as inventories were 88% above the previous year. By April, the result was the lowest prices in 10 years!
What happened?
The results? I like my chances on $3 to $3.60. Eventually, coal retirements and liquefied natural gas exports should push prices higher, but neither of those will impact the next six months. And shale drilling activity is certainly unpredictable because it is still relatively new.
I’m not a betting man though, so you might have to look elsewhere to make your wager.
Posted: February 13, 2013