North America gas weekly update: Henry Hub gas prices in free fall

Colder weather, freeze-offs, and even Freeport LNG’s continued progress toward restart have failed to provide support for Henry Hub gas prices. The February 2023 NYMEX contract bravely expired above $3/mmbtu, losing more than half its value versus the December 2022 contract. The now-prompt March contract is falling further, below $2.70/mmbtu. How much lower will we go? Freeport LNG’s imminent return to full utilization later in February will tighten up markets by about 2 bcfd. However, more may be necessary to avoid storage containment during the upcoming injection season: • Gas burns need to increase further and take market share away from coal. • In combination, US gas production needs to slow down by deferring well completions. • But as a method of last resort, shutting in flowing gas production sets the price floor.