Fitch Solutions has raised Henry Hub forecast this quarter from USD5.85/ mnbtu in 2022 and USD5.75/mnbtu in 2023 to USD7.00/mnbtu in 2022 and USD6.50/mnbtu in 2023, Trend reports.
“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.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 US, a key LNG supplier to Europe,” reads the latest report from Fitch Solutions.
The company’s 2023 price outlook is more mixed.
“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. On the one hand, we expect prices to remain elevated mainly on the back of strong export demand and increased export capacity as Freeport LNG is now expected to return 85% 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, averaging at USD6.50/mnbtu,” the report reads.
Analysts from Fitch Solutions note that natural gas market will remain tight over Q422 on the back of strengthening domestic and export demand.
“The market is set to loosen in 2023, as we now expect a weaker growth in domestic natural gas consumption on the back of slowing economic growth in 2023. Our Country Risk team expects the US economy to grow by 0.9 percent y-o-y next year, down from 1.6 percent y-o-y. Hence, we have revised our natural gas consumption growth from +2 percent to +1.4 percent y-o-y in 2023 as we expect weaker demand from the industrial and power sectors in particular, which on average make up respectively 28 percent and 37 percent of total natural gas demand in the US.”