The US government expects natural gas prices in the US and Europe to remain volatile through to 2022 with the Henry Hub averaging $5.80 per million British thermal units in the fourth quarter of 2021 as US LNG exports are set to increase through 2022 to meet soaring global demand even as they declined 4 percent last month.
The latest Henry Hub forecast is $1.80 per MMBtu higher than in the previous short-term energy outlook issued by the US Energy Information Administration.
“We estimate that US LNG exports averaged 9.3 billion cubic feet per day in September, down 4 percent from August,” said the EIA.
Despite the recent monthly decline, the agency noted that these were the most US LNG exports for September since the US began exporting cargoes from the Lower 48 states in February 2016.
“Even though September exports were a record for the month, they were limited by weather conditions, which led to the suspension of piloting services for several days at Sabine Pass, Cameron, and Corpus Christi,” noted the EIA.
“We expect that LNG exports will average 9.1 billion cubic feet per day in October and then increase in the coming months,” said the report.
The Cove Point LNG terminal in Maryland is scheduled to complete its annual maintenance by mid-October and resume exports this month.
Through this winter, the report said LNG exports would average 10.7 Bcf per day as global natural gas demand remains high.
Several new LNG export Trains, the sixth Train at Sabine Pass LNG and the first Trains at the new Venture Global LNG export facility at Calcasieu Pass LNG, then enter service in 2022.
The EIA outlook also forecast that US inventory draws from working gas storage would be slightly more than the five-year average this winter.
“We expect that factor, along with rising US natural gas exports and relatively flat production through January will keep US natural gas prices near recent levels before downward pressures emerge,” stated the report.
“Given low natural gas inventories in both US and European natural gas storage facilities and uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months,” added the agency.
The EIA estimates that US natural gas inventories ended September 2021 at about 3.3 trillion cubic feet, 5 percent less than the five-year (2016-2020) average for this time of year.
Injections into storage this summer have been below the previous five-year average, largely as a result of more electricity consumption in June due to hot weather, and increased exports even as domestic natural gas production has remained flat.