Natural gas tracking for best week on record
Speakers
Pippa Stevens
— Markets and Energy Reporter, CNBC
Summary
CNBC's Pippa Stevens explains why natural gas prices are up about 60% this week and pacing for their best week on record ahead of an Arctic blast. She cites short covering, a surge in heating demand, and the risk of production freeze-offs in the Marcellus and Utica shales, with Citi estimating an 80 Bcf supply loss. She also highlights that EQT, Range Resources, and Coterra are among the most unhedged producers per Mizuho and could capture more upside, while noting hedging and equipment-freeze risks can tighten the market.
- Natural gas prices spiked about 60% for the week, on pace for a record weekly gain.
- The Arctic blast caught the market off guard and shifted weather forecasts.
- Short covering, heating demand, and freeze-off fears are the three main drivers.
- Citi estimates production losses could reach 80 Bcf in key Appalachian shales.
- EQT, Range Resources, and Coterra are described as the most unhedged producers, per Mizuho.
- Unhedged producers may capture upside, though hedging periods vary and equipment freeze risk remains.
Ideas
Natural gas spike has bullish supply-demand drivers
Natural gas is surging in its best week on record because the Arctic blast caught the market off guard, triggering short covering, a jump in heating demand to 35% above the ten-year average, and fears of production freeze-offs in the Marcellus and Utica shales that Citi estimates could cut supply by 80 Bcf. The result is a tighter market with potential for continued sharp price swings.
Unhedged gas producers can capture price upside
Not all natural gas drillers have direct exposure to the price spike, but EQT, Range Resources, and Coterra are the most unhedged producers according to Mizuho, so they could capture more upside from surging natural gas prices; EQT specifically has the lowest amount of Q1 production hedged.
