Natural gas prices have returned to sub-$3 levels for the remainder of 2019, with only next winter trading just slightly above $3.00 per MMBtu. The February contract settled at $2.950 per MMBtu, 19% below the January settlement and the February 2018 contract settlement. Weather played a large part in the dramatic decline in prices, as the first half of January 2019 came in as the 10th warmest on record, since 1950. This allowed storage levels to move closer to historical averages and saw natural gas prices decline. With storage levels averaging at low levels this past year, there should be an emphasis on re-filling storage this year to higher levels, but the cost of gas will need to average above coal, to divert gas from the power sector to injections. EIA is forecasting natural gas costs to average $2.89 per MMBtu during 2019 and that storage levels will be sitting about 15% below the five-year average, at the end of withdrawal season. With the increase in production growth expected, EIA is also projecting injections to out-pace the five-year average this year and return storage levels to the five-year average by October 2019.
