The US government forecasts a slight decline in US liquefied natural gas exports in May 2021 before they rise again in the Northern Hemisphere summer months to meet continued demand in Europe and Asia.
Natural gas use for LNG is expected to be around 8.6 billion cubic feet per day, more than 90 percent of baseload export capacity utilization in May, before increasing to above 9.0 Bcf per day, according to the short-term outlook of the US Energy Information Administration.
“We expect LNG exports will average 9.2 Bcf per day in both 2021 and 2022, up from 6.5 Bcf per day in 2020,” said the report.
On US production, the EIA forecasts output of dry natural gas would average 91.1 Bcf per day in 2021, which is a decline of 0.3 percent from 2020.
The report estimated that production increased to 91.3 Bcf per day in March, though it forecast relatively flat dry natural gas production in May ahead of production beginning to rise in mid-2021.
“We forecast dry natural gas production will reach 92.0 Bcf per day in the fourth quarter of 2021 and average 93.1 Bcf per day in 2022,” the report added.
“The increase in production reflects sustained higher forecast prices for natural gas and crude oil compared with 2020,” said the EIA.
Working gas storage
On the storage front, the EIA estimated that natural gas inventories at the end of April 2021 were almost 2.0 trillion cubic feet (Tcf), which was 3 percent lower than the five-year (2016-2020) average.
“Natural gas withdrawals from storage during the winter of 2020-2021 were higher than the five-year average, largely as a result of the cold February temperatures that contributed to a drop in natural gas production,” the report explained.
“We forecast that natural gas inventories will end the 2021 injection season (end of October 2021) at more than 3.6 Tcf, which is 3 percent below the five-year average,” said the EIA.
On the Henry Hub spot price, the report expected that it would average $2.78 per million British thermal units in the second quarter of 2021 and would average $3.05 per MMBtu for all of 2021, which is up from the 2020 average of $2.03 per MMBtu.
“We expect natural gas prices will rise this year, primarily as a result of two factors, the growth in LNG exports and rising domestic natural gas consumption in the residential, commercial and industrial sectors,” it said.
The EIA forecasts that in the 2022, the Henry Hub price would decline slightly to an average $3.02 per MMBtu “amid slowing growth in LNG exports and rising production” of natural gas.
