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.
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“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.