US nat gas price to hold steady in 2022 as output increases
09:26, 22 December 2021
The price of US natural gas is forecast to be steady for overall 2022 due to higher year-on-year growth of production, before dropping in 2023.
Bank of America (BofA) Global Research in its recent forecast has maintained its forecast for Nymex Henry Hub natural gas futures at $3.45/per million British thermal units (MMBtu) in 2022, compared with a forecast of $3.47/MMBtu in 2021. The price is forecast to ease to $3.10/MMBtu in 2023.
“Meanwhile with 3.5 Bcf/d (billion cubic feet per day) of year over year production growth on the horizon, we see lower prices ahead,” BofA said.
Renewables up, gas down
Henry Hub has dropped to below $4/MMBtu from more than $6/MMBtu in October due to an expected warmer winter.
BofA expects gas-fired power generation to fall by 0.5 Bcf/d to 30.3 Bcf/d in 2022 year-on-year as expansion in renewable energy capacity may compensate for the fall in coal-fired plants.
“Despite over 15 GW (gigawatts) of coal closures expected next year, the highest annual total since 2015, we do not see natural gas power generation increasing in 2022,” it said.
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Renewable capacity is expected to expand by roughly 28GW next year – 7GW from wind and 21GW from solar.
“Increasing renewable capacity will continue to reduce the call on thermal generation, which we expect to fall to an all-time low average capacity of 267GW next year,” BofA said.
Coal utilisation rates should drop to 44.4% from 45.7% in 2021, reducing the call on thermal generation to a new low, it added.