Natural Gas Jan '25 (NGF25)

Description

Natural gas is a fossil fuel that is colorless, shapeless, and odorless in its pure form. It is a mixture of hydrocarbon gases formed primarily of methane, but it can also include ethane, propane, butane, and pentane. Natural gas is combustible, clean-burning, and gives off a great deal of energy. Around 500 BC, the Chinese discovered that the energy in natural gas could be harnessed. They passed it through crude bamboo-shoot pipes and then burned it to boil sea water to create potable fresh water. Around 1785, Britain became the first country to commercially use natural gas produced from coal for streetlights and indoor lights. In 1821, William Hart dug the first well specifically intended to obtain natural gas, and he is generally regarded as the "father of natural gas" in America. There is a vast amount of natural gas estimated to still be in the ground in the U.S. Natural gas as a source of energy is significantly less expensive than electricity per Btu.

Natural gas futures and options are traded at the CME Group. The CME's natural gas futures contract calls for the delivery of natural gas representing 10,000 million British thermal units (mmBtu) at the Henry Hub in Louisiana, which is the nexus of 16 intra-state and inter-state pipelines. The contract is priced in terms of dollars per mmBtu. The CME Group also has swap futures contracts available for 30 different natural gas pricing locations versus the benchmark Henry Hub location. Natural gas futures are also traded at ICE Futures Europe Exchange.

Prices - CME natural gas futures (Barchart.com symbol code NG) on the nearest-futures chart closed 2023 down by -43.8% at 2.514 per mmBtu.

Supply - US recovery of natural gas in 2022 fell by -5.1% to 43.802 trillion cubic feet. The top US producing states for natural gas in 2023 were Texas with 27.9% of US production, Pennsylvania with 18.5%, Louisiana with 10.4%, New Mexico with 7.7%, Oklahoma with 6.8%, Colorado with 4.4%, and Wyoming with 2.3%. In 2019 the world's largest natural gas producers were the US with 3,003,354 Terajoules and Russia with 2,051,081 Terajoules of production.

Demand - US total delivered consumption of natural gas in 2022 rose by +5.8% yr/yr to 49.900 trillion cubic feet, of which about 41.6% was delivered to electrical utility plants, 29.0% to industrial establishments, 17.1% to residences, and 12.1% to commercial establishments.

Trade - US imports of natural gas (consumed) in 2022 rose by +7.7% yr/yr to 3.042 trillion cubic feet, down from the 2007 record high of 4.608 trillion cubic feet. US exports of natural gas in 2022 rose by +3.8% yr/yr to 6.904 trillion cubic feet for a new record high.

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