Pain in the gas: Henry Hub prices fall below $2 for the first time in 10 months

Henry Hub front month

The dark days are back again for the US natural gas market. Henry Hub fell below $2 today for the first time since April 2023 when that level was briefly breached three times.

If you look at the last 23 years of US natural gas prices, the period below $2 have been brief.

US natural gas, monthly

The shale revolution really ramped up in the late 2010s and that’s been a game-changer aside from the brief period of high prices coming out of the pandemic.

This year, there has been an extremely mild winter in North America and that’s crushed demand. There is some gold in the 6-15 day US forecast but at this point, it’s too little too late.

The killer is US production, which has stepped up 4-5% in each of the past two years. There was a brief freeze-off in January but production is right back to record levels.

US natual gas production via HFI

Ultimately, fracking is natural gas extraction technology and it’s simply gotten too easy to get it out of the ground. Even now, many US natural gas fields deliver enough oil and condensates to make up for near-zero revenue from natural gas… so the pumping continues.

At some point, fields will deplete, LNG exports will pick-up and US power burn will match supply but seeing how easily producers ramped to 105 bcf/day from 92.0 bcf/day in 2021 makes it tough to bet on gas.

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