US Gas Prices Hit Decade Highs | Rigzone

U.S. natural gas prices have “skyrocketed” since mid-March, rising from over $4 per MMBtu to $8.80 per MMBtu at the prompt, a new report from BofA Global Research has pointed out. .

The report, which highlighted this as the highest level since 2008, noted that the rally also extended to the back of the curve with Cal 2024 up almost $1 per MMBtu at the same time. weather.

“After momentarily tipping into a storage surplus in late December, a colder half of winter pushed storage back into a deficit of more than 300 billion cubic feet, the largest in three years,” BofA’s report said. GlobalResearch.

“While not as severe as the trillion cubic feet storage shortfall seen in 2014, the market has pushed prices to decade highs on fears that an increasingly supply/demand balance more inelastic will lead to a gas shortage this winter, increasing the risk premium across the curve,” the report adds.

The Bofa Global Research report noted that the slow start to the year in production played a major role in the Henry Hub rally “given its outsized impact on end-of-season inventory levels.”

“After a slight upturn in April, production has been derailed again in the past two weeks as severe winter storms impacted nearly two billion cubic feet per day of gas production in the Rockies and Bakken,” the report said. .

“Since the start of the production shutdown on April 24, the quick contract has jumped $2 per MMBtu in just eight sessions,” the report adds.

According to the report, production fell to 93.8 billion cubic feet per day in the first quarter of the year from 96 billion cubic feet per day in December.

In the report, Bofa Global Research highlighted that it has raised its expected Henry Hub full-year balance to $7 per MMBtu (Q2-Q4 2022 average) and increased Cal 2023 to $4.50 per MMBtu, adding that remained below current forecasts.

“We still believe there remains some price elasticity in the market, as we expect production to increase by four billion cubic feet per day year-over-year, ending the year above 99. billion cubic feet per day and increasing further in 2023,” the report said. .

“That said, we expect volatility to reign supreme this summer as traditional balancing levers have become less effective,” the report added.

In a previous report sent to Rigzone on March 15, Bofa Global Research pointed out that natural gas prices in the United States rose due to a combination of fundamentals and the surge in global energy prices after reaching a low of nearly $3.50 per MMBtu in late December.

At the time of writing, the Henry Hub gas price was $6.89 per MMBtu. At this time last year, the commodity price was $2.93 per MMBtu. The Henry Hub price rose from less than $4 per MMBtu in February of this year to $8.78 per MMBtu on May 5.

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