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Markets Expect Major Gas Adjustment

October 12, 2020

EIA reports that the spread between natural gas prices for October 2020 delivery and January 2021 delivery was more than three times the five-year average in September and the widest since 2009. The wide spread between contracts reflects the current high level of inventories, and also indicates market expectations that the current oversupply will change in the next few months. EIA forecasts that production will continue to fall for the next several months and that LNG exports will grow rapidly and show year-on-year growth by October 2020. Those changes, combined with seasonal increases in natural gas consumption, will draw down inventories and tighten the market.

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