US bank survey predicts higher natural gas prices
US natural gas prices are expected to reach their highest level since a survey from the US Federal Reserve Bank of Kansas City began, the bank reported October 8.
Firms were asked by the bank where they expected the price of natural gas to be six months, one year, two years and five years down the line. The average results for Henry Hub, the US benchmark for the price of natural gas, were $4.72, $4.22, $4.31 and $4.79/mn Btu, respectively.
Henry Hub was trading near $5.34/mn Btu on the morning of October 11. Even with expectations below current market prices, the Kansas City Fed said the forecasts for natural gas prices were the highest since the survey began in 2017.
Higher natural gas prices have put European economies in crisis mode, though the situation may ease somewhat following Russian assurances of more supplies. Respondents to the Kansas City Fed survey said that could eat into the US market share in Europe, however.
There could be looming relief as soaring commodity prices threaten to throttle global economic growth, crimping demand expectations. The latest estimate for growth in US gross domestic product (GDP) is only 1.3% for the third quarter, the Federal Reserve Bank of Atlanta reported.
GDP increased at an annual rate of 6.5% in the second quarter of 2021.
But higher prices could also be an incentive to drill more, easing some of the supply-side pressures even more.
“Higher prices will open up existing wells shut in last year,” a respondent to the Kansas City Fed survey said.