U.S. natural gas prices fell sharply on Monday due to limited Israeli attacks on Iran and Iran’s decision not to retaliate.
U.S. natural gas production remains near summer highs, while European gas prices remain stable.
The EIA forecasts lower natural gas prices for 2024, with Henry Hub spot prices averaging $2.28/MMBtu.
U.S. natural gas prices crashed on Monday after Israel launched limited attacks on Iran while Supreme Leader Ayatollah Ali Khamenei helped cool tensions after he announced Iran would not issue a direct response to Israel’s latest attacks.
Natural gas prices were trading down 11% to $2.284/MMBtu at 11.17 am CDT in Monday’s session. U.S. gas production from the lower 48 states averaged 102.8 Bcf/d over the weekend, close to 103 Bcf/d summer high and up about 2 Bcf/d from autumn lows.
In 2023, U.S. natural gas prices averaged $2.57/MMBtu, down 62% from 2022’s average, according to the Energy Information Administration (EIA).
In its October short-term energy outlook (STEO), the EIA forecast Henry Hub spot prices would average $2.28/MMBtu in 2024, and $3.06/MMBtu next year. In its September STEO, the EIA forecast Henry Hub spot prices at $2.19/MMBtu this year, and $3.14/MMBtu in 2025.
On a quarterly basis, the EIA predicted in the October STEO that Q4 2024 Henry Hub spots prices would average $2.81/MMBtu, and $3.16/MMBtu in Q1 2025, dipping lower in Q2 and then up to $3.35/MMBtu in Q4.
Meanwhile, European gas prices remain extremely range-bound, with front-month Dutch Title Transfer Facility (TTF) recently passing through EUR 39.50 per megawatt hour (MWh) at least once intra-day on every trading day except one since 30 September. Europe gas prices settled at EUR 40.024/MWh on 21 October, a w/w fall of EUR 0.535/MWh (1.3%).
EU gas inventories stood at 111.96 billion cubic meters (bcm) on 21 October according to Gas Infrastructure Europe (GIE) data; good for a 0.32 bcm w/w increase but below the five-year average build for previous years.
Europe gas inventories are now 2.56 bcm y/yu lower but 5.60 bcm above the five-year average, while storage capacity is 95.3% full. The two largest capacity holders are Germany and Italy, with German storage 97.7% full at 245.69 bcm and Italian storage 98.0% full at 196.11 bcm.
By Alex Kimani for Oilprice.com
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