Will 2024 Bring Stability or More Volatility?

Energy buyers are facing a tug-of-war in the natural gas market. After months of supply-demand imbalances, businesses are left wondering: Are we heading toward stable prices, or is another shake-up coming?

Recent market trends tell a complex story. On one hand, record-high production has kept supply levels strong. On the other, rising exports, extreme weather, and shifting global demand continue to create uncertainty. Prices have fluctuated between $2.00 and $3.00/MMBtu for most of the past year, but the question remains: What happens next?

Why the Market Feels Stuck

Natural gas production hit a record 105 Bcf/d in late 2023, a key reason why prices have remained relatively low. However, the market isn’t just about how much gas is available—it’s about where that gas is going.

• Exports are rising: The U.S. is shipping more LNG overseas, reducing the supply available for domestic use.
• Storage levels are high: Natural gas storage is 6.3% above the five-year average, which has prevented major price spikes.
• Weather is unpredictable: A mild summer limited power demand, but a harsh winter ahead could change everything.

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The Wildcards That Could Disrupt Stability

With so many competing forces, the market is teetering between oversupply and unexpected volatility. Several key factors could tip the scales:

• Winter Weather: If colder-than-expected temperatures hit, natural gas demand will surge, and prices could rise quickly.
• LNG Expansion: U.S. liquefied natural gas exports are growing, and as more export terminals come online, they could push domestic prices higher.
• Production Adjustments: Energy producers often respond to price signals—if they reduce drilling due to low prices, a sudden supply drop could send prices back up.

What This Means for Energy Buyers

If you’re responsible for managing energy costs, timing is everything in this unpredictable market.

• If the mild trend continues, prices could remain soft, making this a good time to lock in lower rates.
• If winter hits harder than expected, demand spikes could drive up costs.
• If LNG exports continue increasing, long-term price floors could rise, making current prices seem like a bargain in hindsight.

Bottom Line

The energy market in 2024 is walking a fine line. While supply is strong now, shifting demand, extreme weather, and global energy trends could quickly change the outlook.

Businesses that stay ahead of these trends and make data-driven energy decisions will be the ones that control costs and mitigate risk—instead of reacting to market surprises.