Winter gas price to average $2.50-$3/mmBtu: Analyst

Market: Natural gas
10/09/24

Average US natural gas prices will range somewhere from $2.50-$3/mmBtu this winter depending on the rate of gas withdrawal, according to East Daley Analytics senior director Jack Weixel.

Weixel spoke today at the Midcontinent LDC Gas Forum in Chicago, Illinois.

Slightly more than 2.1 Tcf (59bn m³) is expected to be withdrawn from US natural gas inventories during winter, according to Weixel. He also noted that any withdrawal over 2.1 Tcf is considered "healthy and normal" and that US inventories saw that level of withdrawal in winter from 2020-22.

However, above-average temperatures last winter heavily limited withdrawals and left US inventories 39pc above the five-year average at the end of winter, according to the Energy Information Administration (EIA). Such a large inventory surplus severely cut prices and disincentivized new production.

Weixel noted that producers have "done everything they can" to limit production this injection season, leading to smaller than average injections. Total US inventories were only 11pc above average at the beginning of September, according to the EIA.

If withdrawals match the 2.1 Tcf expectation, Weixel expects US inventories to end winter close to 179 Bcf above average, pushing average prices up close to $3/mmBtu.

However, if temperatures in the coming winter are once again above average, Weixel said inventories could end the season more than 530 Bcf above average, dropping average prices down to $2.50/mmBtu and undoing price gains earned by the smaller-than-average injection season.

In the nine weeks before withdrawal season begins, Weixel estimated that total US gas inventories would reach 3.9-4 Tcf, keeping prices at roughly $2/mmBtu.

By Anna Muthalaly

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