This coming winter will be an important one, where production growth will likely prove a key factor in covering our winter needs, according to Barclays.US natural gas prices staged a more than 20c rally from the start of November as cold weather was priced in, but this rapid rebound has proved fleeting with prices already ceding that gain in recent closes.

“While prices broke out of the range we expected on both the upside and downside, we do think the overall price risks still look sideways until Q1 15 and we reiterate our Q4 14 price forecast of $3.95/MMbtu; however, the extent of cold we may face this winter remains to be seen,” Barclays said.

Barclays says this winter will not be as cold as last year, which was the coldest in around 30 years, but the winter presents certain risks. Current forecasts indicate that risks are more likely skewed to the colder than warmer side, thus despite expecting production growth the prices are kept unchanged at an average of $4.01/MMbtu for 2015.

“Overall, we forecast lower-48 natural gas production to continue to grow quickly, at 3.9 Bcf/d in 2015 and slightly less in 2016, at 3.5 Bcf/d on average. This added production in 2015 has raised our end-March 2015 storage level forecast to 1.8 Tcf, which implies that storage will approach its theoretical maximum at the end of October 2015 at nearly 4.1 Tcf,” Barclays added.
Source: Barclays