Ample storage levels, milder weather and a boost in production are likely to place downward pressure on US natural gas prices this summer, even as demand is seen reaching record levels, the Natural Gas Supply Association (NGSA) said on Thursday.
The NGSA in its annual Summer Outlook said benchmark prices at the Henry Hub could average below last year’s $7.10 per million British thermal units (mmBtu) for April through October.
That is despite projections for customer demand to average a record-setting 97 billion cubic feet per day (bcfd), rising 3% from last summer, mainly in the power burn and export sectors, the association said.
Front-month gas futures NGc1 for June delivery on the New York Mercantile Exchange settled at $2.398 per mmBtu on Wednesday. NGA/
Prices would be weighed down by a commensurate 3% summer-on-summer increase in production to 101.3 bcfd while entering summer with much higher storage levels at 1.83 trillion cubic feet (tcf) compared to 1.38 tcf last summer, the trade group said.
“Producers are rising to the challenge of meeting strong summer demand for natural gas at home while also providing for the critical needs of an under-suppliedglobal market” said Freeman Shaheen, NGSA chairman and president of global gas at Chevron.
This summer was also forecasted to have 7% fewer cooling degree days, which is the number of degrees a day’s average temperature is above 65 Fahrenheit (18 Celsius), than in 2022.
Exports of liquefied natural gas (LNG) would continue strong as European countries seek to replace Russian gas, while the U.S. power sector fuel mix evolves as gas and renewables replace coal, the NGSA said.
“These changes make additional natural gas pipeline takeaway capacity imperative so that quick-ramping natural gas can be available to provide balance and reliability to the grid,” said Shaheen.
Source: Reuters (Reporting by Deep Vakil in Bengaluru; additional reporting by Brijesh Patel; Editing by David Gregorio)