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    US forecasts moderation in natural gas prices

Summary

The EIA expects the benchmark Henry Hub next year to be about $1.50/mn Btu lower than current prices.

by: Daniel Graeber

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US forecasts moderation in natural gas prices

The US Energy Information Administration (EIA) said October 13 it expected the domestic benchmark natural gas price would decline somewhat through 2022.

Soaring natural gas prices are spawning an energy crisis in the European economy just as the winter heating season begins. European natural gas prices are at multi-year highs and continue to increase despite assurances from major producers such as Russia.

In its latest Short-Term Energy Outlook, the EIA said it expected the Henry Hub spot price, the US benchmark, to average $5.80/mn Btu during the fourth quarter, which is 45% higher than its forecast from September.

EIA said it expects Henry Hub to peak at $5.90/mn Btu in January, but generally decline through the rest of next year. The agency forecast an average price of $4.01/mn Btu for 2022.

“Given low natural gas inventories in both US and European natural gas storage facilities and uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months, with winter temperatures being a key driver of demand and prices,” the EIA’s forecast said.

Domestically, the agency said it expected total natural gas inventories will remain below the five-year range for this time of year.

In terms of output, it expects domestic production to average 94bn ft3/d during the winter season and reach an average of 96.4bn ft3/d next year, driven in part by higher commodity prices.

For non-piped exports, meanwhile, it said domestic deliveries of gas in the form of LNG averaged 9.3bn ft3/d in September, which was a 4% decline from the previous month.

“Despite the recent monthly decline, these were the most US LNG exports for September since the United States began exporting LNG from the Lower 48 states in February 2016,” the EIA’s report read.