The benchmark natural gas prices in the United States could be set for a jump next year, according to the futures curve of the Henry Hub contract.
The forward strip of the Henry Hub futures prices suggests that U.S. natural gas prices could average $3.20 per million British thermal units (MMBtu) next year, according to LSEG data reported by Reuters columnist Gavin Maguire. This would compare to an average price of $2.22 of the benchmark U.S. natural gas price so far this year.
The futures prices indicate that next year U.S. natural gas prices could average 44% higher compared to 2024, which, if materialized, would be the steepest jump in America's natural gas prices since 2022, Maguire notes.
Earlier this year, when the prices hit multi-year lows at the end of the winter and early spring, U.S. natural gas producers and pipeline operators acknowledged there was an oversupply hanging over the market. But they believe that gas will continue to be in demand domestically and internationally for decades to come.
Going forward, higher U.S. LNG exports and U.S. producers recalibrating natural gas production in response to the multi-low prices this year could be setting the stage for a rebound in Henry Hub prices in 2025.
U.S. LNG supply will play a key role in the coming global wave of supply from 2025-2027, with the U.S. and Qatar set for the biggest increases in LNG exports. More gas going to LNG plants could tighten the U.S. domestic market.
In recent years, U.S. natural gas prices have remained relatively low - except for brief spikes during output constraints in winter freezes - despite the continued growth of U.S. LNG exports.
The key reason for this has been the flexibility of U.S. natural gas producers that could act and have acted, in response to market demand and conditions.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More