Henry Hub natural gas spot prices are expected to rise to $3.38 per million British thermal units (MmBtu) in January, according to the EIA’s latest Short-Term Energy Outlook (STEO).
The forecast is based on the assumption domestic demand will rise while production will decline. Growing demand for liquefied natural gas (LNG) exports heading into winter, will also contribute to higher Henry Hub spot prices, Kallanish Energy reports.
In September, the hub spot price averaged $1.92/MmBtu, which is lower than the $2.30/MmBtu recorded in August. The monthly decline reflected falling demand from the power generation sector amid cooler-than-normal temperatures during the last half of the month, as well as lower demand for LNG exports amid hurricane-related shut-ins.
The forecast is for monthly Henry Hub spot price to be above $3/MmBtu throughout 2021. Next year’s estimated average of $3.13/MmBtu is higher than the forecast average of $2.07/MmBtu this year.
The expectations of a recovery in natural gas consumption and potential reduced LNG supply due to maintenance at Australia’s Gorgon LNG, have driven global forward prices up offering better prospects for U.S. LNG.
U.S. LNG exports in September averaged 4.9 billion cubic feet per day (Bcf/d), which is 1.2 Bcf/d higher than in August. The EIA expects LNG exports in the country to return to pre-Covid levels by November 2020 and will average over 9 Bcf/d from December 2020 through February 2021.
This post appeared first on Kallanish Energy News.