Fitch Solutions Raises Henry Hub Gas Price Forecast

Fitch Solutions Raises Henry Hub Gas Price Forecast
Fitch Solutions Country Risk & Industry Research has raised its Henry Hub price forecast.

Fitch Solutions Country Risk & Industry Research has raised its Henry Hub price forecast, a new report from the company, which was sent to Rigzone, has revealed.

The company now sees the Henry Hub gas price averaging $7.00 per MMBtu in 2022 and $6.50 per MMBtu in 2023, the report showed. Fitch Solutions’ previous forecast saw the commodity averaging $5.85 per MMBtu this year and $5.75 per MMBtu next year, the report highlighted.

Looking further ahead, Fitch Solutions projects that the Henry Hub price will average $6.00 per MMBtu in 2024, $5.70 per MMBtu in 2025, and $5.45 per MMBtu in 2026, the company’s latest Henry Hub price report revealed. The Bloomberg Consensus, which was also included in the report, sees the Henry Hub price averaging $6.50 per MMBtu in 2022, $5.90 per MMBtu in 2023, $4.50 per MMBtu in 2024, $4.10 per MMBtu in 2025, and $4.30 per MMBtu in 2026.

“We expect prices to remain elevated over the remainder of 2022 on the back of strengthening demand for natural gas from the residential and commercial users as the heating season approaches,” Fitch Solutions stated in its latest report.

“Below-average storage levels and strong demand for gas from key importers, in particular European countries facing limited gas supplies from Russia, are set to support elevated natural gas price levels in the U.S., a key LNG supplier to Europe,” the company added in the report.

The 2023 price outlook is more mixed, Fitch Solutions noted in the report.

“Although we expect bullish factors to outweigh bearish ones, keeping Henry Hub prices above historical averages, we now expect the 2023 prices to see a steeper decline from 2022 levels than in our previous forecast,” the company stated in the report.

“On the one hand, we expect prices to remain elevated mainly on the back of strong demand export demand and increased export capacity as Freeport LNG is now expected to return 85 percent of production capacity by late November 2022 and become fully operational in March 2023. At the same time, we currently expect weakening economic growth which will likely weigh on natural gas demand and see prices trading lower,” Fitch Solutions added.

The U.S. Energy Information Administration (EIA) is currently forecasting that the Henry Hub spot price will average $7.37 per MMBtu in 2022 and $6.01 per MMBtu in 2023, according to its latest short term energy outlook (STEO), which was released on September 7. The EIA’s previous STEO, which was released in August, saw the Henry Hub spot price averaging $6.80 per MMBtu this year and $5.10 per MMBtu next year.

In a market note sent to Rigzone last week, Rystad Energy Analyst Ade Allen stated that domestic gas balances are setting Henry Hub prices for increased volatility heading into winter “as the market struggles to find equilibrium between upside and downside catalysts as end of season draws near”.

At the time of writing, the Henry Hub price is trading at $6.63 per MMBtu. The commodity’s peak 2022 close, so far, was seen on August 22 at $9.68 per MMBtu and its lowest 2022 close, so far, was seen on January 4 at $3.71 per MMBtu. The Henry Hub price has bounced up and down over the last few months, closing above $9 per MMBtu in June before dropping to under $5.5 per MMBtu during the same month, rising to above $9 per MMBtu again in August and dropping to under $7 per MMBtu in September.

To contact the author, email andreas.exarheas@rigzone.com



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