Natural Gas
Prices: The front-month natural gas futures contract for delivery at the Henry Hub settled at $1.67 per million British thermal units (MMBtu) on July 1, down 10 cents/MMBtu from June 1 (Figure 4). Notably, on June 26 the price of the front-month futures contract fell to its lowest real price (adjusted using the consumer price index (CPI) for all urban consumers published by the Bureau of Labor Statistics, as well as EIA’s projection for CPI in June 2020) in the history of the contract.
The drop in prices during the month was likely a result of above-average storage injections that further increased natural gas stock levels relative to the five-year (2015–19) average. U.S. natural gas production decreased from 91.2 billion cubic feet per day (Bcf/d) in June 2019 and 89.2 Bcf/d in May 2020 to 88.1 Bcf/d in June 2020. Meanwhile, U.S. consumption was 70.4 Bcf/d, essentially unchanged from 70.5 Bcf/day in June 2019 but nearly 3 Bcf/d more than in May 2020. Natural gas-fired electric power generation has seen substantial growth in recent years, particularly during the summer cooling months. In June 2020, increases in natural gas consumption by the power generation sector effectively offset declines observed in industrial consumption, likely related to COVID-19 mitigation efforts. Exports of liquefied natural gas (LNG) also declined sharply in June 2020. EIA estimates that LNG exports fell to 3.6 Bcf/d in June from 5.8 Bcf/d in May. Fewer exports contributed to the largest one-week natural gas inventory increase ever reported for June, 120 Bcf for the week ending June 19.
