July 6, 2023

Chicago Basis Differentials Relative to Henry Hub

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Chicago Basis Drivers

Chicago continues to be well supplied in summer and competes for natural gas supply in winter months.

Natural gas growth in the Permian Basin is expected to continue to push back Midwest supply from USGC markets later in the forecast as Chicago Basis goes negative to Henry Hub.

Chicago Price Forecast to 2035

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In general, all North American natural gas prices were impacted directionally the same over the past couple of years; downward due to the covid pandemic in 2020, increasing in 2021 as markets recovered and jumping considerably higher in 2022 following the Russian invasion of the Ukraine. However, not all price points were impacted to the same degree.

The 2020 Chicago price of $1.90 USD/MMBtu is the lowest annual price recorded since 2010, down 135% compared to $4.50 in 2010. Like all North American prices, Chicago increased the 2 years following 2020; up 125% to $4.30 in 2021 and up a further 45% to $6.25 in 2022. Incorrys expects Chicago prices to fall from $6.25 in 2022 to $1.80 in 2023 as increased supply balances the market. Prices generally continue to increase over the forecast period reaching $2.90 by 2035.

The Chicago Hub, located in Illinois, has connections with 8 interstate transmission pipelines and 7 storage facilities.