The buffers that keep America’s natural-gas price fluctuations at bay are eroding
Last year, natural-gas prices were—by some measures—the most volatile since the U.S. shale boom began about a decade earlier. Despite the recent plunge in prices, it could be just a preview of coming attractions.
Here is one way to quantify the wild swings: There were 18 days last year when the benchmark Henry Hub futures contract’s daily closing prices moved by more than 10%, the most since the Nymex natural-gas contract made its debut more than three decades ago, according to Eli Rubin, senior energy analyst at EBW Analytics Group. Historical volatility—measured as the standard deviation for the previous 20 days of daily changes in the Henry Hub—averaged 81.6% on an annualized percentage basis last year, well above the 10-year average of 48.6%.
