Volatility Reigns Supreme at US Natural Gas Hubs

The coefficient of variation (CV) measures price variability relative to the average. Over the past six months, five key US natural gas hubs were examined for volatility.

Waha in the Permian Basin was the most volatile hub, with a CV of -401% and an average price of -$0.79/MMBtu. However, NGI's daily Waha price has not fallen below zero since June 15, helped by new takeaway capacity from the Gulf Coast Express expansion.

PG&E Citygate and SoCal Citygate were next on the volatility scale, with CVs of 46% and 28%, respectively. Strong hydroelectric balances contributed to that volatility, but hydropower no longer exerts the same influence as September draws to a close.

Chicago Citygate was at the opposite end of the spectrum, matching Henry Hub for the lowest CV at just 7%. This relative calm is out of character with recent norms, both in magnitude and seasonality.