Global gas markets returned to growth in the first half of 2024, but the outlook remains fragile. Will the gas prices hit a new year-to-date low? What is the Natural Gas price prediction for the next 5 years?
The U.S. benchmark Henry Hub natural gas spot price averaged $2.10/MMBtu in 1H24, trading as low as $1.5/MMBtu in mid-February. Natural gas prices fell in early 2024, dropping to levels last seen before the global energy crisis, because of mild winter weather that reduced demand for natural gas for space heating. However, prices have increased across all key markets in recent months, reflecting tighter supply-demand fundamentals. Gas demand growth is expected to moderate in the second half of 2024. With CAPEX.com you can tradeHenry Hub Natural Gas futures through CFDs if you want to speculate on price movements or invest in Energy stocksandETFs. The first half of 2024 saw a more noticeable increase in the gas markets after the natural gas supply shock of 2022 and a gradual rebalance in 2023. According to preliminary projections, during this time, worldwide petrol demand grew by 3% year over year (y-o-y), significantly faster than the 2% average growth rate that has historically been observed between 2010 and 2020. Even with this robust expansion, the recovery is still precarious. In the second quarter, global LNG output fell short of expectations, and price fluctuations is being fuelled by geopolitical concerns. Natural gas prices fell to their lowest points since the world energy crisis in the first quarter of 2024, but prices have since risen in all major countries due to tighter supply-demand dynamics. In the second half of 2024, it is anticipated that the growth in petrol demand would slow. Global petrol demand is expected to rise by 2.5% for the entire year 2024, mostly due to the rapidly expanding Asian markets. The global gas balance contracted in the second quarter due to the reduction in LNG supplies and robust growth in gas demand in Asia. Furthermore, new doubts about Russian gas pipeline supply to Europe surfaced, which fuelled even more price volatility. As a result, by June 2024, petrol prices had risen above their 2023 levels in major Asian and European markets. Between March and June, Henry Hub prices in the US increased by about 70%, rebounding from their multi-decade lows. Gas prices were supported upwardly by upstream producers cutting back on their output, a significant rise in gas-fired power generation, and increased gas exports. According to preliminary estimates, the demand for natural gas rose by 3% globally in the first half of 2024. Nevertheless, the first quarter accounted for 70% of this increase in demand. The second quarter saw a year-over-year reduction in the availability of LNG, which pushed up petrol costs in major import markets and hindered demand growth. Asia was the driving force behind global gas demand growth in the first half of 2024 In the first half of 2024, Asia accounted for around 60% of the rise in worldwide petrol demand, with demand growing by little more than 10% year over year in both China and India. In the first half of 2024, increased petrol use in industry accounted for about 65% of the growth in global demand. The rapid economic growth of Asia's markets was the main driver of this. Natural GasPrice Forecast & Price Prediction – Summary
Fundamental Natural Gas Forecast 2024: Global Market Returned to Growth
Natural gas prices increased across all key markets in the second quarter
Global Gas Demand
With reduced gas-fired power generation in Europe, the robust growth in North America, rapidly expanding Asian markets, and Eurasia were somewhat offset by the more moderate 2% year-over-year increase in gas use in the power sector. In the first quarter, despite unusually mild conditions, the demand for gas in both the residential and commercial sectors increased by 1% year over year.
Natural gas demand growth is forecasted to slow in the second half of 2024
The rise of the world's petrol demand is predicted to slow to less than 2% year over year in the second half of 2024. The relaxation is partially due to demand's slow rebound, which started in the second half of 2023. Global gas demand is expected to increase by 2.5%, or little over 100 billion cubic metres, for the entire year 2024.
IEA anticipates that the modest rise in the world's LNG supply will limit the expansion of import markets. With the power sector's gas use expected to rise just slightly, industry becomes the primary driver of global demand. This is due to the expectation that growth in the rapidly expanding Asian markets and the gas-rich nations of Africa, the Middle East, and North America will be somewhat offset by losses in EU.
Global Gas Supply
The first half of 2024 saw a sluggish increase in the world's LNG supply, rising by about 2%, or about 6 billion cubic metres, annually. The first quarter saw a strong 4.5% (or 6.5 bcm) increase in LNG output, which accounted for all of this gain. In contrast, during the second quarter of 2024, LNG output decreased by 0.5%, or 0.5 bcm, year over year.
This is the first quarterly reduction year over year since 2020, when lockdowns prompted by COVID-19 significantly decreased the demand for LNG and resulted in several cargo cancellations. Unexpected outages combined with problems with feed gas supplies drove down LNG production in the second quarter of 2024.
Natural gas supply is forecasted to increase in the second part of the year
With additional liquefaction capacity coming online in the second half of 2024, the annual rise in LNG supply is anticipated to accelerate. When new plants begin to operate and current plants expand, the United States is expected to supply most of the additional export capacity this year. This includes the growth of Freeport LNG, the summertime ramp-up of Plaquemine's LNG Phase 1, and the anticipated commencement of Corpus Christi Stage 3 in late 2024. The fourth quarter is when the Tortue FLNG facility, located off the coast of West Africa, is scheduled to go online.
Low-emissions gas supply is expected to more than double by 2027
Medium-term deployment of low-emission gases is anticipated to pick up speed. According to our current projection, the supply of low-emission gases will more than double by 2027, representing an absolute increase of over 16 bcm. This reflects increased policy support for low-emission gases and constitutes a major upward revision from our medium-term outlook from the previous year. This expansion is expected to be led by Europe and North America, which will account for more than 70% of the growth overall.
However, more work has to be done to fully realise the promise of low-emission gases and meet the challenging goals established by governments. It is anticipated that several developing low-emission gas producers, such as Brazil, China, and India, will increase their output in addition to North America and Europe.
Natural gas inventories
U.S. natural gas storage inventories were 19% above the five-year average (2019–2023) at the end of June after ending the withdrawal season on March 31 at 39% above the five-year average. EIA forecast natural gas storage injections to continue to fall below the five-year average this injection season because of relatively flat production through 2H24 and a summer increase in demand from the electric power sector.
As a result, the surplus of natural gas in storage will be further reduced, and EIA forecasts that inventories will end the summer injection season on October 31 at almost 3,970 billion cubic feet, still 6% above the five-year average and 4% more than inventories at the end of the 2023 injection season.
Natural Gas Price Forecast - Technical Outlook
The recent performance of natural gas signals a continued bearish trend. Natural gas has declined over 35% from its peak in June 2024 and is expected to drop further in the coming weeks. After a notable recovery from the February 2024 low, it has now retraced two-thirds of those gains, indicating a potential revisit to the lows of 2020. The broader trend shows a persistent downward movement since August 2022. Currently trading near $2, with a potential drop to $1.3 imminent, it’s crucial to identify where a significant upturn might occur, warranting caution for sellers.
However, despite this sharp selloff to 2.02, natural gas could find support at 2.00, signalling possible buyer interest and a potential rebound.
If the 2.02 support zone fails to hold, a drop below 2.00 will have the price of natural gas heading towards the 78.6% Fibonacci retracement at 1.92. That price is given further significance as it confirmed by the gap up support level from late-April at 1.91.
Nonetheless, it is possible that the 2.00 price area holds as support and attracts buyers. On a daily chart there is no sign of strength until natural gas rallies above today’s high of 2.21.
As a summary of this technical natural gas price forecast, the charts point towards a few weeks' decline if the key support level at $2.00 won't hold. If the support holds, the most likely scenario for natural gas prices is entering the $2-$3 trading range again for the rest of the year.
Natural Gas Price Predictions 2024
In its latest Natural Gas forecast, the US Energy Information Administration expects the U.S. benchmark Henry Hub natural gas spot price to increase throughout 2024 from its recent lows. The agency forecast the Henry Hub price to average $2.90/MMBtu for the second half of 2024 and $3.3 for 2025.
Morning Star has kept all Henry Hub gas price assumptions unchanged. US gas production continues to outstrip consumption increases, although the gap has decreased, in line with their previous expectations. Production continues to grow from a combination of associated gas from oil-focused drilling and natural gas-focused drilling last year. The natural gas rig count has declined to 118 this year from about 160 a year ago. This decline will lead to slowing production growth but with a lag. Henry Hub prices are extremely volatile and weather-dependent, and will remain so, particularly in the short term, said Fitch Ratings.
Due to expected mild winter weather from the El Niño phenomenon and continued production growth, Fitch Ratings revised downward their Henry Hub Natural Gas price prediction to $3.25/mcf in 2024 from $3.50/mcf.
The agency maintains its long-term price prediction for natural gas (Henry Hub) unchanged at $2.75/mcf. Fitch concludes it is unlikely prices will improve in the near term beyond typical seasonal patterns and current strip pricing. Rated natural gas producers in the U.S. and Canada are generally protected from a short-term decline in prices through hedges and improved balance sheets. Henry Hub natural gas prices remain stubbornly low in 2023, although prices recovered from a $2.00 low reached earlier in the year. Production continues to grow, although this will likely moderate as rig count declines have started to gain traction. Fitch believes the effects on production will not be strong enough to counter the potential of warm winter weather, despite the uncertain path of winter weather and the production effects of a rig count decline.
Trading Economics’ Europe natural gas forecast saw the fuel trading at 2.70 USD/MMBtu by the end of this quarter, rising to 3.13 in 12 months, as of mid July2024, the time of the last natural gas forecast and price predictions update. The agency revised down their natural gas forecast and price prediction for the next 12 months.
In a natural gas forecast in mid-December, ANZ Research forecasted LNG spot price averaging $23.5 in 2024.
Algorithm-based forecasting service Wallet Investor was neutral on its natural gas price forecast for 2024, noting that it was a very good long-term (one-year) investment. The service forecast the natural gas price to trade at 2.05/MMBtu at the end of 2024 with a high at $2.41 in November.
Natural Gas Forecast for the Next 5 Years
Will natural gas prices continue to decrease in the next 5 years?
At the beginning of 2023, Bank of America (BofA) Global Research forecasted the US Henry Hub gas price to steadily decline to $4.50/MMBtu by December 2023 from $6.50 in December 2022.
The Henry Hub gas price was expected to edge down to an average of $6.5/MMBtu in 2023 from an average of $7.0/MMBtu in 2022, according to Fitch Solutions’ forecast on 8 December 2022. TheUS natural gas pricewas predicted to drop to $5.75 in 2023.It forecasts the UK’s natural gas price National Balancing Point (NBP) to average $34.8/MMBtu in 2023, dropping to $39.0/MMBtu in 2022.
Multinational lender ABN-AMRO on12 Decemberforecast saw natural gas prices falling to $6.5/MMBtu in 2023 and dropping further to $5 in 2024, from $7.30 in 2022.
ANZ Research forecast the LNG spot price to drop to an average of $32/MMBtu in 2023 and $23.5/MMBtu in 2024, compared with an estimated$36.8/MMBtu in 2022.
TheWorld Bankforecast US natural gas prices could average $6 in 2024. It expected European gas prices to trade at $28 in 2024, dropping from $40 in 2022. As for LNG, the bank predicted it would average $15.90 in 2024, falling from $18.40 in 2022.
In its natural gas price forecast for 2025, Wallet Investor’s system projected the fuel to mainly trade sideways in the next years, climbing to $3.013 by July 2028.
Natural Gas Forecast for 2030-2050
While analysts typically did not provide along-term outlook for natural gas prices, algorithm-based price prediction services can offer such forecasts by assessing historical data. Let’s take a look atwhat the future price of natural gascould be.
Fitch Rating’slong-termnatural gas price forecaston 5 December expected Henry Hub to average $2.75 per 1,000 cubic feet (Mcf) and Dutch TTF to average $5.0/Mcf in 2026 and beyond, dropping from $3/MMBtu and $10/MMBtu in 2025 respectively. The firm did not give any predictions for how much gas would cost in 2030.
Deloitte’snatural gas price forecast for 2030in September saw Henry Hub tradingat $5.40/Mcf, down from $8.50/Mcf in 2022. The firm’snatural gas price forecast for 2040expected the US gas price to rise to $6.55/Mcf.
In 2041, Henry Hub was expected to trade at $6.70/MMBtu. It did not give anatural gas price forecast for 2050, but Deloitte projected Henry Hub’s prices to increase by 2% per year after 2041.
Most analysts are highly cautious about providing long-term natural gas price forecasts due to the volatility of the energy market.
When looking for future gas price predictions and attempting to assess the long-term outlook for natural gas prices, bear in mind that analysts’ forecasts can be wrong. Analysts’ projections are based on making fundamental and technical studies of the asset’s performance, but past performance never guarantees future results.
Always do your own research and remember that your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio, and how comfortable you feel about losing money. Never invest more money than you can afford to lose.
Natural Gas Historical Performance
Natural gas prices soared from the second half of 2020 to the third quarter of 2022, owing to rising post-COVID-19 demand and concerns about Russia’s supply after it invaded Ukraine in February 2022.
In the fourth quarter of 2021, uncertainties regarding Russia’s supply bolstered the price rally, according toCedigaz. Europe’s natural gas price reached its highest price for 2021 at €187/MWh on 21 December, before retreating to €70 on the last day of 2021.
Dutch Title Transfer Facility (TTF), the European gas price benchmark futures, rose almost 268% in 2021, while JKM rose 113%. US natural gas prices increased by almost 47% in 2021.
Global natural gas prices tumbled in the second half of 2022, from the heights reached in August.
US natural gas price began 2023 at $4.38, having fallen from a 14-year high of $9.85 per metric million British thermal units (MMBtu) on 29 August.
The recent Natural Gas price action started a base building after hitting seven-month highs around $2. Following this reversal pattern, natural gas reached an 8-month high at the beginning of Q4 2023.
The surplus at the start of winter and a mild winter and the seasonality sent the natural gas prices to the lowest levels since 2020, close to the $1.5 mark.
Following the natural gas supply shock of 2022 and a gradual rebalancing in 2023, gas markets moved to more pronounced growth in the first half of 2024, trading above $3 again, before falling to $2 at the beginning of Q3.
Other price predictions:
Sources:
- https://www.cmegroup.com/markets/energy/natural-gas/natural-gas.html
- https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
- https://www.iea.org/reports/gas-market-report-q3-2024/executive-summary
- https://think.ing.com/articles/article-1-global-lng-supply-set-to-balloon-hold/
FAQs on Natural Gas Forecast & Price Predictions
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