The EIA expects US natural gas prices to remain high until 2022.

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The EIA expects US natural gas prices to remain high until 2022.

Posted by matino on June 9, 2022 — Drop A Comment

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In our June 2022 Short Term Energy Outlook (STEO), we predict that US natural gas prices will rise again this month and then remain high until 2022. Natural gas prices in Louisiana averaged $ 8.14 on the US Henry Hub benchmark. Per British thermal unit (MMBtu) in May 2022, and we expect the Henry Hub price to average $ 8.71 / MMBtu this summer (June to August).

We expect U.S. natural gas prices to remain relatively high in 2022 as lower than average natural gas inventories affect both supply and demand.

Consumption of natural gas has remained high in the US electric power sector despite high natural gas prices. We expect natural gas consumption in the US electric power sector to average 0.9 billion cubic feet per day (bcf / d) in 2022 compared to 2021, although we expect the Henry Hub to cost 3.49 / MMBtu more. ۔ In the US electric power sector, power plants tend to use more coal due to rising natural gas prices. However, this alternative fuel has been relatively limited in recent months due to supply disruptions in the coal market and historically low coal reserves.

In addition, we expect U.S. exports of liquefied natural gas (LNG) to remain high this summer, in part as a result of Russia’s full-scale invasion of Ukraine. So far this year, 75% of American LNG cargoes have gone to Europe, up from 34% in 2021. Higher international natural gas prices could also lead to further US LNG exports.

We expect U.S. production of natural gas to increase in 2022, but not as much as demand. We expect dry natural gas production to average 96.5 Bcf / d in 2022, which is 3.2% (or 3.0 Bcf / d) higher than the 2021 average.

As demand for natural gas has increased production, inventory of natural gas has been declining. Natural gas inventories start the 2022 summer injection season (April to October) 17% lower than the five-year (2017–21) average. We expect natural gas storage levels to be 9% lower than the five-year average by the end of October, at the start of this coming heating season.

We predict that natural gas prices will fall in early 2023 as more domestic natural gas production, less LNG exports and increased demand for domestic natural gas, and more natural gas in reserves.