Natural Gas Prices Take Another Ride

By the end of the year, natural gas spot and futures prices had fallen significantly despite entering the winter heating season enjoying the highest U.S. natural gas prices in almost eight years. What happened?

Steve Hendrickson, Ralph E. Davis Associates
Natural Gas Prices Take Another Ride

RED President Steve Hendrickson looks at the recent volatility in natural gas prices and what the future might hold for the commodity. (Source: Shutterstock.com)

Just over two months ago we were entering the winter heating season enjoying the highest U.S. natural gas prices in almost eight years. Demand was strengthening as the economy continued to recover, exports were humming and although rig counts were higher, natural gas producers had, for the most part, maintained capital discipline and resisted the urge to overdrill.

By the end of the year, however, natural gas spot and futures prices had fallen significantly. What happened?

Overproduction doesn’t seem to be the culprit. Although U.S. natural gas production has increased steadily since the demand drop at the start of the pandemic, the annual average has been consistent over the last three years.

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