Natural gas prices tumble: Here’s what you need to know

CNBC’s Pippa Stevens joins ‘Squawk on the Street’ to report on the natural gas prices and more.

>>> WELL, WHILE STOCKS HAVE BEEN CHASING HISTORY, DIFFERENT STORY FOR NATURAL DPGAS. PRICES DOWN MORE THAN 30%. PIPPA STEVENS JOINS US WITH MORE. >> HEY, SARA, THIS IS REALLY A CASE OF WHAT A DIFFERENCE A YEAR MAKES, BECAUSE LAST YEAR, ENERGY PRICES WERE HIGH, AND EVERYONE

WAS TALKING ABOUT A POTENTIAL ENERGY CRISIS IN EUROPE. THAT DIDN’T HAPPEN, AND PRICES HAVE SINCE TUMBLED, INCLUDING HERE IN THE U.S., WHERE NAT GAS IS PACING FOR ITS WORST YEAR SINCE 2006. MILD TEMPERATURES THROUGHOUT THE YEAR CUT FUEL DEMAND AND OUTPUT HAS STAYED AROUND RECORD LEVELS,

MEANING THE MARKET IS NOW OVERSUPPLIED WITH STORAGE 8% ABOVE THE FIVE-YEAR AVERAGE. PRODUCTION IS SO HIGH IN PART BECAUSE OF ASSOCIATED GAS. THAT’S GAS PRODUCED ALONGSIDE OIL. CRUDE PRICES ARE STILL ABOVE BREAK-EVEN LEVELS SO THAT’S STIMULATING ASSOCIATED GAS PRODUCTION. IN TOTAL, IT’S ABOUT 15% OF

DOMESTIC SUPPLY. BUT THE SURGE IN LNG EXPORTS DOES PROVIDE A FLOOR OF SORTS FOR PRICES, EVEN WITH LOWER DOMESTIC DEMAND. DURING THE FIRST HALF OF THE YEAR, THE U.S. WAS THE LARGEST LNG EXPORTER WORLDWIDE WITH MORE THAN HALF HEADING TO EUROPE. NEW EXPORT SITES ARE BEING

CONSTRUCTED IN THE U.S., WHICH SHOULD KEEP DEMAND HIGH. AND LOOKING AHEAD, THE EIA CUT ITS FORECAST FOR HENRY HUB PRICES, NOW PREDICTING THEY’LL AVERAGE $2.80 THROUGHOUT THE WINTER HEATING SEASON, WHICH ENDS IN MARCH. THAT’S ABOUT 12% ABOVE WHERE WE ARE RIGH