Benchmark natural gas spot prices are projected to remain relatively flat during the fall shoulder season before strengthening in 2025 as LNG exports outpace supply growth, according to updated federal forecasts.
In the September Short-Term Energy Outlook (STEO) published Tuesday, the U.S. Energy Information Administration (EIA) projected the Henry Hub natural gas spot price would increase to around $2.50/MMBtu by the end of the year from an average of around $2 during the third quarter. The estimates are lower than the previous EIA forecast.
EIA said it expected September prices would remain close to August’s as less natural gas is consumed before heating demand picks up in the winter. Researchers projected U.S. gas consumption would fall in September month/month by 8% to 79 Bcf/d.
“We forecast that natural gas prices will remain relatively flat in the upcoming shoulder season of September and October before generally rising in 2025,” EIA researchers said.
In the latest STEO, EIA estimated Lower 48 dry gas production would rise in 4Q2024 to 104.0 Bcf/d from an average of 103.3 Bcf/d in the third quarter.
“We expect U.S. dry natural gas production will remain relatively unchanged over the next several months as some producers, particularly in the Marcellus and Haynesville shale regions, continue to curtail production until prices rise,” the researchers said.
Natural gas prices have been under pressure this year after a mild winter swelled inventories to roughly 40% above the five-year average. In response, explorers curtailed output from the record pace last winter of around 107 Bcf/d. This summer, the industry extended or added curtailments as output in July crept above 103 Bcf/d. The inventory surplus as of Aug. 30 had fallen to about 11% above the five-year average. EIA reported a 13 Bcf injection for that week, which put stocks at 3,347 Bcf.
Henry Hub prompt month futures have bounced between support levels above $2 in early September. Prices peaked in June above $3. The October contract traded up above $2.240 in early trading Tuesday after settling down 10.5 cents to $2.170 on Monday. Cash prices have closely followed futures prices since July. NGI’s Daily Henry Hub price fell 6.0 cents to $2.035 on Monday.
Gulf Supply Swing
Separately on Tuesday, EIA researchers said the startup of the Matterhorn Express Pipeline this month was expected to add price support to Permian Basin prices, which have languished below zero for about 47% of the trading days in 2024, NGI data show.
The 2.5 Bcf/d natural gas pipeline that runs from West Texas to the Katy hub near Houston began initial operations last week. It is expected to reach full capacity early next year.
“The takeaway capacity added when the Matterhorn pipeline enters service should allow producers to increase deliveries of natural gas out of the Permian Basin and help to increase the natural gas price at the Waha Hub, making its price difference to the Henry Hub less negative or even positive,” EIA researchers said.
[Lower 48 Natural Gas Market Fundamentals: Join NGI’s Patrick Rau, senior vice president of Research & Analysis, in a forward-looking episode of NGI’s Hub & Flow podcast to hear the latest estimates for natural gas production growth in 2025.]
Ahead of Matterhorn’s startup, Permian benchmark Waha cash prices fell to an all-time average low of negative $6.410 on Thursday (Aug. 29). Waha has priced negative for nearly one-half of the trading days this year.
Permian producers, including Devon Energy Corp., plan to use Matterhorn’s downstream interconnects to ship gas “into Louisiana and beyond,” potentially piggybacking on north-south supply routes from the Haynesville Shale to supply liquefied natural gas terminals on the Louisiana coast.
Gulf Coast LNG terminals were facing a threat of disruption as Tropical Storm Francine was expected to make landfall as a possible Category 2 hurricane in east-central Louisiana on Wednesday. Hurricane Beryl hit the Texas coast in July and shut down the Freeport LNG terminal for more than a week.
LNG terminals were set to receive about 13 Bcf of feed gas on Tuesday, according to NGI’s U.S. LNG Export Flow Tracker.
EIA said that U.S. LNG exports would rise by 2 Bcf/d in 2025 as export capacity comes online. With that demand projected to outpace production growth, domestic gas prices could rise to an average of $3.140 in 2025 from $2.190 in 2024, EIA said. Those estimates were about 4% and 5% lower than its previous forecast, respectively.
