Natural Gas Price Forecast - Feb 11

dan_s · Post by **dan_s** » Thu Feb 11, 2021 2:01 pm

February weather in the U.S. will soon move ngas storage below the 5-year average. Unless demand for U.S. LNG declines rapidly during April and May (now zero chance of happening), ngas storage will continue to fall in April, shortening the refill season. I believe natural gas prices will average more than $3.00/MMBtu in 2H 2021 and will test $4.00 if we have a hot summer.

"The only thing keeping natural gas prices from surging has been an extremely warm fall and start to the 2020–2021 winter. Both November, December and the first two weeks of January were 10% warmer than normal. The warm weather has reduced heating demand leaving US natural gas inventories approximately 10% higher than the five-year seasonal average at the end of January. Weather models indicate that much colder weather will likely grip the North American continent in February."
"While North America has been warmer than normal, Europe and Asia have both been much colder causing both natural gas demand and spot LNG import prices to soar. Both European and Asian spot LNG prices spiked into the mid $20’s and low $30’s per mmbtu, respectively in early January—both records. Concerns over global LNG deficits in the coming years have now emerged. Demand for US LNG exports reached an all-time high of nearly 10 bcf/d in December after having collapsed to only 3 bcf/d in July."
Seven years ago, we wrote extensively about global natural gas demand, and how emerging market demand would far outstrip the growth in future LNG supply. In the natural gas section of this letter, we have updated our 2014 LNG models. We continue to believe demand for LNG will outstrip supply as we progress through the decade. Tight LNG markets means strong demand for US exports as global consumers constantly attempt to lock in longer term supply."
"We remain extremely bullish on North American natural gas and recommend significant exposure to high quality E&P companies."
- Goehring & Rozencwajg Q4 2020 Natural Resource Market Commentary 2-11-2021