In a market update sent to Rigzone this morning, Rystad Energy senior analyst Lu Ming Pang noted that US Henry Hub prices “remain[ed] deflated to $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 price trajectory from the highs seen in 2022, with strong supply and storage fundamentals that effectively suppress Henry Hub prices, even in the summer injection season.”
In the update, Pang noted that storage levels rose to 2,446 Bcf on May 26, which he noted is 17 percent higher than the five-year average and 29 percent higher 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.
“Feed gas to US liquefaction was 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 dropped feed gas 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, since June 1, that feed gas fell below 4 billion cubic feet per day, suggesting ongoing maintenance,” Pang continued.
The Rystad Energy analyst noted in the update that 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 released on June 6, the US 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. Commodity average $6.42 per MMBtu in 2022, the latest STEO highlighted.
In its previous STEO, which was released in May, the EIA projected the Henry Hub spot price to average $2.91 per MMBtu in 2023 and $3.72 per MMBtu in 2024.
“We expect the US benchmark Henry Hub natural gas spot price to increase 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 being lower than the five-year average (2018- 2022) in the coming months, are the main drivers,” the EIA added.
“While we anticipate an increase in natural gas prices for the summer months due to inventories reducing the surplus to the five-year average, we expect high inventory levels to keep prices well below from last year, which averaged nearly $8.00 per MMBtu in 3Q22,” EIA continued at STEO.
At the time of writing, the Henry Hub price is trading at $2.26 per MMBtu. The commodity’s 2023 year-to-date close was seen on January 4 at $4.172 per MMBtu, and its 2023 year-to-date close was seen on March 29 at $1.991 by MMBtu. The commodity has closed around $2 per MMBtu 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 team of 500 people, its website shows. Pang, who analyzes gas and LNG markets for the company, previously worked at ExxonMobil.
To contact the author, please send an email andreas.exarcheas@rigzone.com
