BMI, a Fitch Options firm, revealed its newest Henry Hub entrance month pure fuel worth forecasts out to 2028 in a brand new report despatched to Rigzone late final week.
In keeping with the report, BMI now expects the commodity to common $2.8 per million British thermal items (MMBtu) in 2024, $3.6 per MMBtu in 2025, $3.8 per MMBtu throughout 2026 and 2027, and $4.0 per MMBtu in 2028.
The report additionally included a Bloomberg Consensus, which projected that the Henry Hub worth will common $2.7 per MMBtu this yr, $3.6 per MMBtu in 2025, $3.7 per MMBtu in 2026, and $3.8 per MMBtu throughout 2027 and 2028.
- Advertisement -
In a earlier report despatched to Rigzone again in January, BMI forecast that the Henry Hub worth would common $3.4 per MMBtu in 2025, $3.6 per MMBtu in 2026, $3.8 per MMBtu throughout 2027 and 2028, and $4.0 per MMBtu in 2028.
A Bloomberg Consensus included in that report projected that the commodity would are available at $3.3 per MMBtu in 2024, $3.8 per MMBtu in 2025, $4.0 per MMBtu throughout 2026 and 2027, and $3.4 per MMBtu in 2028.
“We now have reduce our 2024 Henry Hub entrance month pure fuel worth forecast to $2.8 per MMBtu from our preliminary forecast of $3.4 per MMBtu to mirror the extreme worth declines recorded in Q124,” analysts at BMI famous within the firm’s newest report.
“This implies the 2024 common Henry Hub worth will settle above present lows and solely barely above 2023 ranges,” they added.
“Regardless of the expectation of extended weak spot in costs over the close to time period, entrance month costs are anticipated to rebound over the rest of 2024, on the again of strengthening demand pushed by the ability, industrial, and LNG sectors, and weaker than anticipated provide, which can tighten the home fuel market,” they went on to state.
The analysts revealed within the report that they’ve reduce their 2024 pure fuel manufacturing forecast from yr on yr progress of three.6 % to 1.2 %, “contemplating bulletins from many U.S. pure fuel producers and the broadly weakening sentiment within the home market”.
The BMI analysts additionally famous within the report that, past 2024, they anticipate pure fuel costs to stay on an upward trajectory, “supported by the increasing LNG trade and robust home demand, notably from the ability sector”.
Intensified Volatility
Within the report, the BMI analysts highlighted that, over the primary quarter of this yr, Henry Hub entrance month costs “skilled intensified volatility, with the benchmark rising to over $3.3 per MMBtu in mid-January, pushed by provide disruptions and heightened demand amid a chilly snap in a number of the largest fuel producing basins within the U.S.”.
The pattern abruptly reversed as soon as the chilly snap handed and the climate forecast for the remaining winter months indicated comparatively gentle temperatures, the analysts acknowledged within the report.
“This, coupled with wholesome storage ranges, continued progress in pure fuel output, and a few momentary outages of LNG manufacturing at Freeport LNG, brought on Henry Hub costs to say no to the bottom ranges since June 2020,” they added.
“Costs tumbled to $1.58 per MMBtu earlier than recovering solely barely and averaged $1.75 per MMBtu in March 2024,” they continued.
USA Fuel Balances Stay Oversupplied
In a fuel and LNG market replace despatched to Rigzone on April 11, Rystad Vitality Senior Analyst Masanori Odaka highlighted that immediate month Henry Hub costs “rose 1.9 % to roughly $1.57 per MMBtu on 5 April”.
“U.S. fuel balances stay oversupplied, with Decrease 48 storage ranges 23 % increased than in 2023 and 38 % increased than the five-year common because the market enters the non-peak season for fuel,” Odaka added within the report.
“Within the ahead curve, contango continues to steepen with winter costs averaging $3.26 per MMBtu as market contributors anticipate LNG export expansions will present pricing upside,” Odaka continued.
The Rystad analyst famous within the report that U.S. dry fuel manufacturing ranges proceed to stay regular “as curtailments are anticipated to proceed”.
“Our newest forecast signifies summer time manufacturing will common 102.5 billion cubic toes per day (Bcfpd), 1.5 Bcfpd decrease than our earlier estimates,” Odaka added.
To contact the creator, e mail andreas.exarheas@rigzone.com
