Rystad Energy Analysts Look at Henry Hub Prices

In a gas and LNG market update sent to Rigzone by Rystad Energy on Thursday, Rystad Senior Analyst Masanori Odaka highlighted that, on July 2, front-month Henry Hub prices for August decreased by 14.9 percent week on week to $2.435 per million British thermal units (MMBtu).

Odaka outlined in the update that the decrease was “due to increased natural gas production and a lowered demand outlook.”

“Although gas consumption is holding strong, with higher than normal demand anticipated in the coming weeks, it is still insufficient to make a meaningful dent in storage,” Odaka noted in the update.

“Gas stocks remained elevated at 3,097 billion cubic feet for the week ending 21 June, 21 percent above the five-year average,” Odaka added.

In the update, Odaka said Lower 48 daily dry gas production continues to hover around 100 billion cubic feet per day and noted that June feedgas levels remained flat at 12.8 billion cubic feet per day compared to May.

In a previous gas and LNG market update sent to Rigzone on June 20, Rystad Energy Senior Analyst Lu Ming Pang said U.S. dry gas production was reported to be at 99.3 billion cubic feet per day as of the week ending June 12. He highlighted that this was down slightly from the 99.6 billion cubic feet per day reported for the week of June 19.

“Dry gas production is forecast to increase to 102.8 Bcfd in July, according to Rystad Energy estimates,” Pang said in the update.

“This is net bearish for prompt Henry Hub prices despite the recent warm weather, as operators begin higher production on the back of stronger Henry Hub prices and anticipated higher summer demand,” he added.

Pang pointed out in the update that a “heat dome” had continued to move towards the U.S. Midwest and Northeast.

“The number of cooling degree days (CDDs) is expected to remain higher than normal until July 4 as a result of the heat,” Pang stated in the update.

Pang highlighted in the update that Feedgas into LNG terminals averaged 12.7 billion cubic feet per day from June 11-17. Pang outlined that this was lower than the average of 13.1 billion cubic feet per day from June 4-10, which the Rystad representative said may have contributed to lower demand in the Henry Hub.

“Feedgas levels are anticipated to pick up in the coming weeks, with the 1.4 million tons per annum (Mtpa) Altamira FLNG expected to start-up in July, after a delay in its final commissioning stages,” Pang said.

“The floating LNG terminal originally expected to export its first cargo in June,” Pang added.

Pang noted in the update that U.S. gas storage levels were reported to be at 2,974 billion cubic feet as of June 7, “above the five-year maximum of 2,831 billion cubic feet”.

“This is also higher than the 2,610 billion cubic feet reported this time a year ago, and the 2,401 billion cubic feet reported as the five-year average from 2019-23,” Pang added.

The U.S. Energy Information Administration (EIA) increased its Henry Hub price forecast for both 2024 and 2025 in its latest short term energy outlook (STEO), which was released last month.

In its June STEO, the EIA projected that the Henry Hub spot price will average $2.46 per MMBtu in 2024 and $3.24 per MMBtu in 2025. In its previous May STEO, the EIA projected that the Henry Hub spot price would average $2.18 per MMBtu in 2024 and $3.09 per MMBtu in 2025.

In a report sent to Rigzone last month by Fitch Group, analysts at BMI, a unit of Fitch Solutions, noted that, to meet their 2024 Henry Hub annual price average of $2.8 MMBtu, “prices are set to average at $3.4 MMBtu over the remainder of the year.”

Source: www.rigzone.com