Commodity Market Report

North America gas markets short-term outlook January 2020: the race to the bottom

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23 January 2020

North America gas markets short-term outlook January 2020: the race to the bottom

Report summary

As hopes of a “normal” winter have faded, the race to the bottom has started, with the January contract closed at $2.16/mmbtu and prompt February trading below $2.00.mmbtu. But if history has taught us anything, low prices are the cure to low prices. Winter 2015/2016 saw the the March 2016 contract settle at $1.71/mmbtu due to high supply levels and extremely mild weather, but Henry Hub quickly recovered to above $3.00/mmbtu by the start of Winter 2016/2017. Already supply and demand are reacting to low prices; US gas production has been declining and is projected to continue to do so. Record high power levels are expected to increase, with coal-to-gas displacement, and we expect record levels of LNG and Mexican exports to inch up even further.

Table of contents

  • The race to the bottom has started with hopes of a return to normal winter weather erased. Time is running out with few remaining peak heating demand days as short-term weather forecasts now extend into early February. However, current low gas prices below $2/mmbtu are unsustainable. Both supply and demand sensitivity to low prices are occurring. US gas production has been in decline and projected to continue throughout 2020. Already record high power demand levels are expected to increase further with additional coal-to-gas displacement. Add in record levels of LNG and Mexican exports and a more constructive fundamental picture is painted for next winter and beyond.
  • Low Permian and Northeast prices further pressure production, while Canadian producers may benefit from stronger AECO basis.

Tables and charts

No table or charts specified

What's included

This report contains:

  • Document

    North America gas markets short term outlook January 2020 The race to the bottom.pdf

    PDF 757.47 KB

  • Document

    Basis Outlook.xls

    XLS 114.50 KB

  • Document

    Demand Detail.xls

    XLS 761.00 KB

  • Document

    Industrial Index.xls

    XLS 113.50 KB

  • Document

    LNG Detail incl Export.xls

    XLS 223.50 KB

  • Document

    NGL Price Outlook.xls

    XLS 176.00 KB

  • Document

    Northeast Takeaway Capacity.xlsx

    XLSX 471.00 KB

  • Document

    Power Demand Curve.xls

    XLS 182.50 KB

  • Document

    Price Outlook.xls

    XLS 121.50 KB

  • Document

    Storage Outlook.xls

    XLS 161.00 KB

  • Document

    Supply Demand Balances.xls

    XLS 319.00 KB

  • Document

    Supply Detail.xlsx

    XLSX 254.35 KB

  • Document

    North America gas markets short-term outlook January 2020: the race to the bottom

    ZIP 2.58 MB

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