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    US forecasts decline in natural gas prices

Summary

Henry Hub, the US benchmark for the price of natural gas, is drifting away from recent highs above $6.00/mn Btu.

by: Daniel Graeber

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US forecasts decline in natural gas prices

The US Energy Information Administration (EIA) said November 9 it expects domestic natural gas prices to be about 20% lower than current levels on average next year.

Henry Hub, the US benchmark for the price of natural gas, has traded at just over $5.00/mn Btu for most of the week. The EIA said in its Short-Term Energy Outlook for November that it expected the price to average $5.53/mn Btu through February and then fall to $3.93/mn Btu for 2022 due in part to higher domestic gas production.

“Because of uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months with winter temperatures to be a key driver of demand and prices,” EIA cautioned.

Dry natural gas production averaged 94.9bn ft3/day in October and should average 95.2bn ft3/day between now and March. In 2022, the EIA estimates a full-year average for dry natural gas production of 96.7bn ft3/day, driven by higher commodity prices that will support enough drilling to at least sustain production. The amount of gas in storage, however, is expected to remain below the five-year range at least through early 2022.

The EIA estimates exports of LNG, meanwhile, will average 9.8bn ft3/day for all of 2021, on par with levels seen in October. Exports could increase by 17% next year on the assumption that a sixth train at the Sabine Pass terminal opens and a new facility at Calcasieu Pass enters into service. Both of those are in Louisiana.