US EIA sees strong natural gas prices through 2022
The US Energy Information Administration (EIA), in its April Short-Term Energy Outlook (STEO) published April 12, said the benchmark Henry Hub spot natural gas price would average $5.68/mn Btu in Q2 2022, but would decline to $5.23/mn Btu for all of 2022 and to $4.01/mn Btu in 2023.
But the agency said its forecasts remain “highly uncertain” in light of the various ways nations, energy producers and the market could respond to Russia’s invasion of Ukraine.
“Russia’s actions came at a time when global inventories of crude oil, natural gas, and coal were below average, contributing to continued price volatility and high prices,” it said in a statement accompanying the STEO.
In April, exports of LNG are expected to increase from 11.9bn ft3/day in March as demand in Europe remains strong. The export strength, the EIA said, will push the April Henry Hub average to $5.95/mn Btu.
Contributing to the price strength, the EIA noted, are low storage levels, which ended the gas year on March 31 at 1.4 trillion ft3, about 17% below the five-year average, with March withdrawals at 203bn ft3, reflecting flat production and rising exports.
The EIA is projecting April injections at 245bn ft3 and expects gas in storage at the end of April to stand at about 1.7 trillion ft3, about 14% below the five-year average. By the time the injection season ends at the end of October, it expects to see storage volumes at 3.5 trillion ft3, about 4% below the five-year average.
March dry gas production averaged 96.2bn ft3/d, up from 95bn ft3/d in February, but lower than December due to brief periods of freezing temperatures in some regions, which contributed to well freeze-offs. In 2022, the EIA is projecting average dry gas production at 97.4bn ft3/d, up 3.8bn ft3/d from 2021, while production in 2023 is projected at 100.9bn ft3/d.