Why US natural gas prices have weakened in November?
Update: 2020-11-18
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Henry Hub prices at the prompt have weakened in November. Four key drivers
Warmer than expected weather in the US (Temperatures are 24% higher than normal this month).
As Henry Hub prices increased above US$3/mmbtu level in October – this has incentivised more coal fired generation in the US (Exhibit 2 below)
Reduced power demand due to COVID restrictions cutting load by 2.7 GW nationwide.
Finally, US gas production has improved (chart of the day) – but they remain below pre-COVID levels of activity will be supportive for HH from re-visiting Q1 lows (at least until WTI remains below US$45/bbl).
Prospects for US gas balances improving from here hinges on temperatures normalising for the rest of the winter and COVID lockdowns easing in Q1 21.
Warmer than expected weather in the US (Temperatures are 24% higher than normal this month).
As Henry Hub prices increased above US$3/mmbtu level in October – this has incentivised more coal fired generation in the US (Exhibit 2 below)
Reduced power demand due to COVID restrictions cutting load by 2.7 GW nationwide.
Finally, US gas production has improved (chart of the day) – but they remain below pre-COVID levels of activity will be supportive for HH from re-visiting Q1 lows (at least until WTI remains below US$45/bbl).
Prospects for US gas balances improving from here hinges on temperatures normalising for the rest of the winter and COVID lockdowns easing in Q1 21.
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