A BMI report sent to Rigzone by Fitch Group recently revealed BMI’s latest Henry Hub gas price forecasts through 2028.
The report shows that BMI, a subsidiary of Fitch Solutions, expects the Henry Hub price to average $2.4 per million British thermal units (MMBtu) in 2024, $3.4 per MMBtu in 2025, $3.8 per MMBtu in 2026 and 2027, and $4.0 per MMBtu in 2028.
A Bloomberg consensus included in that report forecast that the commodity price will average $2.6 per MMBtu this year, $3.5 per MMBtu next year, $3.7 per MMBtu in 2026, and $4.0 per MMBtu in 2027 and 2028.
A BMI report sent to Rigzone in June showed that BMI expects the Henry Hub price to average $2.80 per MMBtu in 2024 and $3.60 per MMBtu in 2025.
Another BMI report sent to Rigzone in April showed the company forecasting an average price for the commodity of $2.80 per MMBtu this year, $3.60 per MMBtu next year, $3.8 per MMBtu in 2026 and 2027, and $4.0 per MMBtu in 2028.
A Bloomberg consensus included in that report forecast that the Henry Hub price would average $2.7 per MMBtu this year, $3.6 per MMBtu next year, $3.7 per MMBtu in 2026, and $3.8 per MMBtu in 2027 and 2028.
In a BMI report sent to Rigzone in February, BMI forecast that the Henry Hub price would average $3.4 per MMBtu in 2024 and $3.6 per MMBtu in 2025.
“The continued weakness in the U.S. natural gas market has led us to further revise downward our forecast for the Henry Hub front month of 2024,” BMI analysts said in the company’s latest report.
“We currently expect gas prices to average $2.4 per MMBtu in 2024, a 15 percent reduction from our previous forecast,” they added.
“Although Henry Hub prices recovered somewhat in June, market weakness returned in July, leaving the current year Henry Hub price at $2.2 per MMBtu in mid-August 2024,” they continued.
“The lower-than-expected levels for nearly eight months so far this year support our view that average annual prices are lower than originally expected. As a result, the average Henry Hub price in 2024 is expected to be 11 percent below the 2023 average,” the analysts added.
In the latest BMI report, BMI analysts expressed their view that prices will recover later in the year and “will average $2.7 per MMBtu from mid-August to December.”
“There are a number of factors that support our view, with expected demand growth in the LNG sector taking precedence,” they explained.
“Rising seasonal heating demand from private households and production cuts ahead of the year will also support the price recovery later this year,” the analysts added.
“While we expect prices to increase in the remaining months of 2024, we note a number of factors that will limit the recovery, particularly healthy inventory levels,” they continued.
In their report, BMI analysts also pointed to geopolitical risks, which they said posed a significant upside risk to their forecast.
“We note the ongoing Ukrainian incursion into Kursk Oblast in Russia, which increases the risk of disruption to gas supplies,” they warned.
“However, we maintain our view that gas supplies from Russia are unlikely to be disrupted during the downturn. In addition, healthy stockpiles in Europe and a steady flow from Norway would act as a buffer in the event of a disruption,” they added.
“We also point to the ongoing risk of conflict escalation in the Middle East, which could lead to a disruption in LNG supplies and thus an increase in global gas prices,” they added.
The U.S. Energy Information Administration (EIA) lowered its Henry Hub spot price forecasts for this year and next year in its latest Short Term Energy Outlook (STEO), released earlier this month.
In its most recent STEO, the EIA forecast that the Henry Hub spot price would average $2.30 per MMBtu in 2024 and $3.27 per MMBtu in 2025. In its previous STEO in July, the EIA forecast that the Henry Hub spot price would average $2.49 per MMBtu this year and $3.29 per MMBtu next year.
A report sent to Rigzone on August 13 by Paul Horsnell, head of commodities research at Standard Chartered Bank, shows that the bank forecasts the future price of natural gas in the United States at the NYMEX base in Henry Hub, Louisiana, to average $2.70 per MMBtu in the fourth quarter of 2024, $3.20 per MMBtu in the first quarter of next year, $3.50 per MMBtu in the second and third quarters, and $2.80 per MMBtu in the fourth quarter.
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