How low can NG go before producers can not make profit?

[SunTrader]

Baker Hughes Weekly Gas Rig count (down 2 rigs 162 to 160, but well up in the yearly high/low range of 166 to 138:-

 

[heispark]

Heispark , thanks for you explanation but I am still a bit confused . I do get that price for jan is higher , it makes sense. But if next moth contract for gas go up 5% every month doesn't jan24 goes up 5% as well?

So may23 goes up 5% is jan24 gonna go up 5%
then on may1, jun23 goes up 5 % is jan24 gonna go up additional 5% ?
aren't all contract in direct correlation to the closest expirary month ?

No. They move independently. That's how spread trading works. I think you're new to futures trading. Try watch some Youtube videos about futures trading.
Thanks

 

[easymon1]

But if next moth contract for gas go up 5% every month doesn't jan24 goes up 5% as well?

 

[Overnight]

No. They move independently. That's how spread trading works. I think you're new to futures trading. Try watch some Youtube videos about futures trading.
Thanks

Wrong, Heis. They are so closely-correlated, they may as well be. @john7722 Don't worry so much about percentages as about tick moves. Because of the price differentials, the percentages will be way off for the same move.

Here's an example...

So we have May 23 contract and Feb 24 contract.

At the time of easymon's SS, the current price and previous settle are in green.

The difference in current price from last settle are in yellow.

Note that they both show a -11 cents delta, with a 1/1000th cent difference.

Why are the percentages so far apart? Because look at the current prices in green. Feb24 is $1.60 higher than May23.

Ergo, an .11 cent move in a $2 instrument is going to be a larger percentage move than .11 cent move in a $3.7 instrument.

But the key here is that they both moved down nearly the exact same amount of ticks.

 

[SunTrader]

(Oilprice.com) Today

Chart of the Week

- US natural gas prices are at the lowest levels in almost 3 years as mild weather and the oil industry’s drilling spree have created a perfect storm, with associated gas accounting for roughly a third of natural gas output.

- After plunging below $2 per mmBtu in late March, prompt-month Henry Hub futures are trading around $2.1/mmBtu, with the futures curve all in contango, indicating the market anticipates supply cuts.

- The amount of US gas in storage is 21% higher than the 5-year average for this time of year, with stocks boosted by limited liquefaction from Freeport LNG, equivalent to 2% of the total gas supply back in the day.

- According to IEA forecasts, US natural gas production is expected to hit 100.67 BCF per day this year, up 3% compared to last year’s 98 BCF per day, even though some shale gas drillers have already curtailed production on low prices