After taking a back seat to oil all year, natural-gas prices are hot again, and some analysts think the stocks of gas producers have a chance to steal the spotlight from their oilier peers. Oil prices, by comparison, have been falling lately because of a decline in demand for gasoline, among other factors.
In 2022, natural-gas prices averaged $6.45 per MMBtu because the U.S. was exporting much more gas than usual to Europe. Europe depended on U.S. gas because it had stopped importing gas from Russia after its invasion of Ukraine. Natural gas declined late in the year, however, after Europe had a mild winter and ended up with an excess amount of gas in storage.
Newsletter Sign-up On the supply side, the U.S. entered the year with a glut of natural gas. But starting in the spring, producers began reducing the number of rigs they were operating because of the low prices. The number of natural-gas rigs is down by more than 20% from May levels. Those decisions are starting to pay off now, as supply growth has moderated even as demand has risen.