EIA Reveals Latest Henry Hub Gas Price Forecasts
by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas
The U.S. Energy Information Administration (EIA) revealed its latest Henry Hub gas price forecasts for 2024 and 2025 in its latest short term energy outlook (STEO), which was released recently.
According to its May STEO, the EIA now sees the 2024 Henry Hub spot price averaging $2.18 per million British thermal units (MMBtu) in 2024 and $3.09 per MMBtu in 2025. In its previous April STEO, the EIA projected that the Henry Hub spot price would average $2.15 per MMBtu in 2024 and $2.89 per MMBtu in 2025.
The EIA expects the Henry Hub spot price to average $1.71 per MMBtu in the second quarter of this year, $2.16 per MMBtu in the third quarter, $2.73 per MMBtu in the fourth quarter, $2.93 per MMBtu in the first quarter of next year, $2.84 per MMBtu in the second quarter, $3.19 per MMBtu in the third quarter, and $3.39 per MMBtu in the fourth quarter, the latest STEO shows.
In its previous STEO, the EIA forecast that the commodity would come in at $1.63 per MMBtu in the second quarter of 2024, $2.15 per MMBtu in the third quarter, $2.71 per MMBtu in the fourth quarter, $2.82 per MMBtu in the first quarter of 2025, $2.62 per MMBtu in the second quarter, $2.96 per MMBtu in the third quarter, and $3.17 per MMBtu in the fourth quarter of next year.
“Low natural gas prices are reducing natural gas production in the United States,” the EIA noted in its May STEO.
“We expect U.S. dry natural gas production to fall by two percent from 1Q24 to 2Q24, with natural gas production in June averaging 102 billion cubic feet per day (Bcf/d), down four percent from the monthly record set in December 2023,” the EIA added.
Production is falling as some producers have announced curtailments because of low natural gas prices, the EIA stated in the STEO.
“In addition, a wide difference between the price of natural gas and petroleum products is encouraging producers to extract higher-value hydrocarbon gas liquids (HGLs) from the natural gas stream,” the EIA said.
The EIA revealed in the STEO that it expects dry natural gas production in the U.S. will be down one percent this year compared with last year then rise by two percent in 2025 “to a record of almost 105 Bcf/d”.
“The increase in production next year is the result of our forecast of rising natural gas prices, which will create an incentive for more drilling in dry natural gas production regions,” the EIA said in the STEO.
“Increases in crude oil production in our forecast next year also result in more associated natural gas production. We expect the gap between natural gas and petroleum prices will narrow in 2025, which could keep more HGLs in the natural gas stream next year,” it added.
Also in the STEO, the EIA forecast that 2024 U.S. natural gas consumption will be unchanged from last year, “averaging 89 Bcf/d for the year”.
“Small consumption increases in our forecast occur in the residential, commercial, and electric power sectors, and those increases are offset by a slight year-over-year decline in industrial sector consumption of natural gas,” the EIA noted in the report.
“In May 2024, we forecast natural gas consumption to average 72 Bcf/d, three percent less than in May 2023. The decrease from May 2023 mostly reflects our expectation of less natural gas used to generate electricity because of cooler temperatures and more generation from renewables,” it added.
“Less natural gas is typically consumed in May in the United States than in other months of the year because demand for space heating declines and demand for air conditioning brought on by warmer weather has yet to increase,” it continued.
“Following the year-over-year drop in natural gas consumption in May, we forecast relatively flat consumption through the end of next year. We forecast that U.S. natural gas consumption will average 88 Bcf/d in 2H24, about one percent more than in 2H23,” the EIA went on to state.
The increase comes mostly from the residential and commercial sectors, the EIA said in its May STEO.
“We expect the sectors to consume seven percent more because our forecast assumes that 4Q24 will be colder than 4Q23, which was very mild, increasing demand for space heating,” it added.
In a report sent to Rigzone this week, Standard Chartered Bank projected that the nearby future NYMEX basis Henry Hub Louisiana price will average $4.70 per MMBtu across the third and fourth quarters of this year, $4.80 per MMBtu in the first quarter of next year, $4.70 per MMBtu in the second quarter, and $5.00 per MMBtu in the third quarter.
Standard Chartered sees the commodity averaging $4.80 per MMBtu overall across 2025 and 2026, and $4.50 per MMBtu overall in 2027, according to the report.
In a research note sent to Rigzone last month, J.P. Morgan projected that the Henry Hub price will average $2.93 per MMBtu in 2024 and $4.75 per MMBtu in 2025. In that note, the company forecast that the Henry Hub price will average $2.25 per MMBtu in the second quarter, $3.00 per MMBtu in the third quarter, $4.00 per MMBtu in the fourth quarter, $4.75 per MMBtu in the first quarter of next year, $4.50 per MMBtu in the second quarter, $4.75 per MMBtu in the third quarter, and $5.00 per MMBtu in the fourth quarter of 2025.
In another report sent to Rigzone last month, BMI, a Fitch Solutions company, projected that the Henry Hub front month natural gas price will average $2.8 per MMBtu in 2024, $3.6 per MMBtu in 2025, $3.8 per MMBtu across 2026 and 2027, and $4.0 per MMBtu in 2028.
The report also included a Bloomberg Consensus, which projected that the Henry Hub price will average $2.7 per MMBtu this year, $3.6 per MMBtu in 2025, $3.7 per MMBtu in 2026, and $3.8 per MMBtu across 2027 and 2028.
In a previous report sent to Rigzone back in January, BMI forecast that the Henry Hub price would average $3.4 per MMBtu in 2025, $3.6 per MMBtu in 2026, $3.8 per MMBtu across 2027 and 2028, and $4.0 per MMBtu in 2028.
by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas