Story Credit: Andreas Exarheas |RigZone.com|The U.S. Energy Information Administration (EIA) increased its Henry Hub price forecasts for 2023 and 2024 in its latest short-term energy outlook (STEO), which was released recently.
In its November STEO, the EIA projects that the Henry Hub spot price will average $2.67 per million British thermal units (MMBtu) in 2023 and $3.25 per MMBtu in 2024. The EIA forecast in its latest STEO that the Henry Hub spot price will average $3.26 per MMBtu in the fourth quarter of this year, $3.42 per MMBtu in the first quarter of next year, $2.94 per MMBtu in the second quarter, $3.24 per MMBtu in the third quarter, and $3.42 per MMBtu in the fourth quarter of 2024.
In its previous STEO, which was released in October, the EIA projected that the Henry Hub spot price would average $2.61 per MMBtu in 2023 and $3.23 per MMBtu in 2024. That STEO saw the commodity coming in at $3.03 per MMBtu in the fourth quarter of 2023, $3.31 per MMBtu in the first quarter of 2024, $2.86 per MMBtu in the second quarter of next year, $3.20 per MMBtu in the third quarter, and $3.55 per MMBtu in the fourth quarter.
The Henry Hub spot price averaged $6.42 per MMBtu in 2022, the EIA’s latest STEO highlighted.
“The U.S. benchmark Henry Hub spot price in our forecast averages around $3.40 MMBtu over the course of the winter, peaking in January at over $3.60 per MMBtu,” the EIA noted in its November STEO.
“Natural gas prices typically rise during the winter as demand for space heating increases and consumption of natural gas peaks for the year,” it added.
“We forecast prices this winter to be lower than last winter because of increased production and relatively full natural gas storage inventories entering the winter heating season,” it continued.
At the start of the winter last year prices were over $5 per MMBtu and storage inventories were three percent below the five-year average, the EIA noted in its latest STEO.
USA Gas Storage, Production
In its November STEO, the EIA revealed that, at the end of October, which it noted marks the end of the U.S. natural gas storage injection season, it expects that U.S. working natural gas in underground storage reached 3,835 billion cubic feet (Bcf). That figure is six percent more than the five-year average, the EIA highlighted in the STEO.
“Driven by strong natural gas production and expected warmer than average winter weather, we forecast U.S. natural gas inventories will end the winter heating season in March with 21 percent more natural gas than the five-year average, with just under 2,000 Bcf in storage,” the EIA said in its latest STEO.
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The EIA highlighted in the STEO that it expects U.S. dry natural gas production to average almost 105 billion cubic feet per day (Bcfpd) during the second half of 2023, which it noted is up nearly two Bcfpd from the first half of the year.
“We forecast U.S. dry natural gas production will continue to average around 105 Bcfpd during the winter heating season,” it added.
“Our expectation of warmer than average winter weather, with four percent fewer heating degree days (HDDs) this winter compared with the prior 10-year average, reduces consumption for space heating in the commercial and residential sectors by two percent compared with the five-year average,” it continued.
“Although we expect this winter on average to be warmer than normal, we expect January and February to be colder than last year’s warmer-than-average January and February,” the EIA went on to state.
In the November STEO, the EIA highlighted that natural gas storage inventories in the East, Midwest, and South Central are all more than 87 percent full entering the winter, according to its forecast.
“In the Mountain region, which has much less storage capacity than the other regions, we estimate storage is 98 percent full, the highest level on record at the end of October,” the EIA said in the STEO.
“Pacific region storage stocks were well below the five-year average all of last winter, supporting record-high natural gas prices in the region in December 2022, but Pacific inventories have increased steadily this summer and are almost 80 percent full entering this winter heating season,” it added.
Henry Hub Price Projections
In a report sent to Rigzone last week, BMI, a Fitch Solutions company, projected that the Henry Hub natural gas price would average $2.90 per MMBtu in 2023 and $3.40 per MMBtu in 2024.
In a separate report sent to Rigzone at the start of this month, BMI had the same Henry Hub price projections for 2023 and 2024.
Another report sent to Rigzone last week showed that Standard Chartered expected the NYMEX basis Henry Hub price to average $4.75 per MMBtu in 2024. That report expected the commodity to come in at $4.80 per MMBtu in the first and second quarters of next year, and $4.70 per MMBtu in the third and fourth quarters of 2024.
Standard Charted had the same Henry Hub price projections for 2024 in a report sent to Rigzone last month.
To contact the author, email andreas.exarheas@rigzone.com. ORIGINAL STORY HERE
