Lower Natural Gas Production Seen Driving $2 Price Jump this Winter

Henry Hub spot natural gas prices are sitting under $1.50/MMBtu, but lower production is expected to drive a more than $2 rebound by February/March, assuming normal weather, according to IHS Markit.

IHS Markit analysts expect the tightening supply/demand balance to lift Henry Hub cash prices to the $2.50 range by year’s end, up from an average near $1.80 in September/October, and to around $3.40 by February/March. This compares to the firm’s $1.87 forecast for full year 2020 and is on par with the Energy Information Administration’s (EIA) most recent Henry Hub price outlook. Moody’s Investor Service also credited lower production for a projected rise in prices this winter.

The last time February/March prices were sustained above $3.00 was in 2014, according to the EIA....