Natural Gas Price Forecast - Feb 8
Posted: Mon Feb 08, 2021 7:22 pm
Piper Sandler 2-8-2021
"We remain constructive on the natural gas macro as we anticipate meaningful declines in storage which should drive higher prices over the next two years (>$3.00/HH)."
"The slow start to winter coupled with a less steep production decline relative to the
peak drove meaningfully weaker pricing entering 2021 than we previously expected.
Notwithstanding the slow start to winter, we anticipate April 1 storage of 1.7 Tcf (-16%/-7%
vs. prior/five year) assuming trailing 10-year weather moving forward. Weather remains a
wildcard but forecasts for the next 14 days look very encouraging. Beyond winter, strong
LNG exports and production aligned with late 2020 levels should result in a mild injection
season. Accordingly, we anticipate November 1 storage of 3.1 Tcf (-20%/-16% vs. prior/five
year), thereby laying the foundation for exceptionally low storage entering the next winter
season. Given the price elastic nature of natural gas, we expect prices will rise in order to
maintain reasonable storage entering the next winter. Accordingly, we continue to believe
prices should exceed $3.00/HH over the next two years ('21/22 Strip: $2.93/$2.69/HH)."
"We remain constructive on the natural gas macro as we anticipate meaningful declines in storage which should drive higher prices over the next two years (>$3.00/HH)."
"The slow start to winter coupled with a less steep production decline relative to the
peak drove meaningfully weaker pricing entering 2021 than we previously expected.
Notwithstanding the slow start to winter, we anticipate April 1 storage of 1.7 Tcf (-16%/-7%
vs. prior/five year) assuming trailing 10-year weather moving forward. Weather remains a
wildcard but forecasts for the next 14 days look very encouraging. Beyond winter, strong
LNG exports and production aligned with late 2020 levels should result in a mild injection
season. Accordingly, we anticipate November 1 storage of 3.1 Tcf (-20%/-16% vs. prior/five
year), thereby laying the foundation for exceptionally low storage entering the next winter
season. Given the price elastic nature of natural gas, we expect prices will rise in order to
maintain reasonable storage entering the next winter. Accordingly, we continue to believe
prices should exceed $3.00/HH over the next two years ('21/22 Strip: $2.93/$2.69/HH)."