Natural gas price headed towards $3/MMBTU in a month

Natural gas is a commodity that has been heavily volatile in 2020. NYMEX natural gas prices made a low of $1.43/MMBTU in late June 2020, a high of $3.39/MMBTU in November 2020, and finally ended the year at $2.53/MMBTU, marking an annual gain of 16 per cent.

Since MCX’s natural gas prices are a mirror reflection of NYMEX rates, the volatility was similar on the domestic bourse. MCX NSE 0.23 % natural gas prices were up 17 per cent in 2020, settling at Rs.182.1 per MMBTU on December 31.

Electricity generation via natural gas increased in the US in 2020.

The use of natural gas, which is one of the main sources of generating electricity in the US, has been substantial in the past five years. Annual electricity generation from natural gas power plants in the US increased 31 per cent in the northeastern region, 20 per cent in the central region, and 17 per cent in the southern region between 2015 and 2019. In the western region of the continental United States, electric power generation from natural gas power plants remained relatively flat during the same period. Through November 2020, the central, southern and northeastern regions have generated similar amounts of electricity from natural gas power plants.

While the electricity generation efforts via gas was commendable, the increase in LNG exports from the US also played a significant role for the rise in natural gas prices, while the world grappled with the pandemic in 2020.

ET News
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