Natural gas spot prices fall to lowest level since 1999
Last year, natural gas spot prices fell to the lowest level in 18 years, according to U.S. Energy Information Administration. In 2016, the prices were an average of $2.49 per million British thermal units “at the national benchmark Henry Hub, the lowest annual average price since 1999.” Between February and May, the average price was less than $2 per million British thermal units, but by December the average jumped to $3.58 per million British thermal units. “Warmer-than-normal temperatures for most of the year and changing natural gas demand were the main drivers of natural gas prices in 2016.”
Prices were volatile in regional markets last year. In the first quarter of 2016, warmer-than-normal temperatures and high levels of natural gas in storage led to price decreases. In late spring, prices started to increase as natural gas demand rose and production fell, “before sharply increasing at the end of the year with the onset of cold temperatures in mid-December,” according to EIA.
Natural gas usage in the residential and commercial sectors fell 7% and 4%, respectively, from 2015, because of the warm weather. The weather also contributed to the decline in storage withdrawals, resulting in “at or near record levels” of inventories and reaching a record 4.047 trillion cubic feet in the week of Nov. 11. Though overall demand fell for the year, “late-year increases in these sectors and increased demand from other sources” led to a rise in natural gas prices in late 2016.