Analyst Flags Downward Trajectory of USA Henry Hub Prices

In a market update sent to Rigzone this morning, Rystad Energy Senior Analyst Lu Ming Pang outlined that U.S. Henry Hub prices “remain[ed] deflated at $2.23 per MMBtu” at the time of writing the update on June 6.

That was lower than the $2.30 per MMBtu quoted in last week’s report, Pang noted in the update, adding that “this maintains the downward trajectory of prices since the highs observed in 2022, with strong supply and storage fundamentals effectively suppressing Henry Hub prices, even into the summer injection season”.

In the update, Pang highlighted that storage levels increased to 2,446 Bcf as of May 26, which he noted is 17 percent higher than the five-year average and 29 percent more than during the same period last year.

“The injection of … 110 Bcf is 10 percent higher than the five-year average injection and higher than the 82 Bcf injection last year,” Pang stated in the update.

“Feedgas into U.S. liquefaction was at 11.29 billion cubic feet per day on June 4, and typically averaged about 12.36 billion cubic feet per day in May. Sabine Pass LNG contributed to this decline, which had feedgas fall to 3.1 billion cubic feet per day on June 4, below the typical average of 4.6 billion cubic feet per day seen in May,” he added.

“This was the fourth consecutive day, starting on  June 1, where feedgas fell below 4.0 billion cubic feet per day, suggesting ongoing maintenance,” Pang continued.

The Rystad Energy analyst highlighted in the update that the Sabine Pass LNG is expected to begin maintenance on two out of six of its trains this month.

In its latest short term energy outlook (STEO), which was published on June 6, the U.S. Energy Information Administration (EIA) projected that the Henry Hub spot price would average $2.66 per MMBtu in 2023 and $3.42 per MMBtu in 2024. The commodity averaged $6.42 per MMBtu in 2022, the latest STEO highlighted.

In its previous STEO, which was released in May, the EIA projected that the Henry Hub spot price would average $2.91 per MMBtu in 2023 and $3.72 per MMBtu in 2024.

“We expect the U.S. benchmark Henry Hub natural gas spot price to rise in the summer months, averaging just over $2.60 per MMBtu in 3Q23, up from an average of $2.15 per MMBtu in May,” the EIA noted in its June STEO.

“Rising natural gas use in the electric power sector and flattening production growth – which together contribute to storage injections that are less than the five-year average (2018–2022) in the coming months – are the primary drivers,” the EIA added.

“Although we forecast an increase in natural gas prices for the summer months due to inventories narrowing the surplus to the five-year average, we expect high inventory levels will keep prices well below last year’s prices, which averaged almost $8.00 per MMBtu in 3Q22,” the EIA continued in the STEO.

At the time of writing, the Henry Hub price is trading at $2.26 per MMBtu. The commodity’s highest close in 2023, so far, was seen on January 4, at $4.172 per MMBtu, and its lowest close in 2023, so far, was seen on March 29, at $1.991 per MMBtu. The commodity has closed around the $2 per MMBtu mark on several occasions this year.

Rystad describes itself as an independent research and business intelligence company. The business, which was founded in 2004, currently has offices in more than 25 locations worldwide and a 500-strong team, its website shows. Pang, who analyzes the gas and LNG markets for the company, has previously worked at ExxonMobil.

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