Henry Hub Price Expected to Average $8.69 in 3Q

The U.S. Energy Information Administration (EIA) expects the Henry Hub natural gas spot price to average $8.69 per million British thermal units (MMBtu) in the third quarter of this year, the organization’s latest short term energy outlook (STEO) has revealed.

According to the May STEO, the EIA sees the Henry Hub spot price averaging $7.83 per MMBtu in the second quarter and $8.48 per MMBtu in the fourth quarter. The full year 2022 average price is now expected to come in at $7.42 per MMBtu, according to the latest STEO.

The EIA’s newest Henry Hub forecasts mark a notable increase to the ones made in the organization’s previous April STEO. The April STEO outlined that the EIA saw the Henry Hub spot price averaging $5.68 per MMBtu in the second quarter, $5.50 per MMBtu in the third quarter, and $5.06 per MMBtu in the fourth quarter. In the April STEO, the full year 2022 average price was projected to come in at $5.23 per MMBtu.

“In April, the Henry Hub natural gas spot price averaged $6.59 per MMBtu, which was up from the March average of $4.90 per MMBtu and higher than the April 2021 average of $2.66 per MMBtu,” the EIA stated in its May STEO.

“We expect the Henry Hub price to average $7.83 per MMBtu in 2Q22 and average $8.59 per MMBtu in 2H22. High forecast natural gas prices reflect our expectation that natural gas storage levels will remain less than the five-year (2017–2021) average this summer,” the EIA added.

“Lower than average storage levels partly result from limited opportunities for natural gas to coal switching for power generation, which we forecast will keep the demand for natural gas for power generation high despite high prices,” the EIA continued.

The EIA also warned in the May STEO that natural gas prices could rise “significantly above” forecast levels if summer temperatures are hotter than assumed in its forecast and electricity demand is higher.

In 2021, the Henry Hub spot price averaged $3.91 per MMBtu, the EIA’s May STEO highlights. The fourth quarter of 2021 saw the highest average quarterly spot price for the year at $4.77 per MMBtu, the STEO shows.

A BofA Global Research report sent to Rigzone recently highlighted that U.S. natural gas prices have “rocketed” higher since mid-March, rising over $4 per MMBtu to $8.80 per MMBtu at the prompt.

In a separate report sent to Rigzone last month, Fitch Solutions Country Risk & Industry Research revealed that it had raised its 2022 Henry Hub price forecast to $4.9 per MMBtu.

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