CIO retains a cautious outlook for US natural gas prices, but they refrain from a short recommendation at the moment given the winter weather risks. (UBS)
Also, US natural gas production helped to tighten fundamentals in October, with maintenance dragging down production; but production recently started testing record highs again. Prevailing higher prices are also not of help, as they could incentivize gas-to-coal switching and reduce power demand for natural gas.
We retain a cautious outlook for US natural gas prices, but we refrain from a short recommendation at the moment given the winter weather risks. Winter temperatures are always a wildcard for the US natural gas market. That said, winter temperatures have gradually risen over the past decades. We expect US natural gas inventories to end the withdrawal season (end-March) at around 1.8 trillion cubic feet, close to the five-year high.
For 2024, we will closely monitor the start up dates of new LNG export terminals, as the timing should determine when the market will tighten. The US Energy Information Administration estimates Golden Pass Trains 1 and 2 and Plaquemines Phase 1 will add a total of 2.7 billion cubic feet per day (bcf/d) of LNG export capacity, which should increase US LNG exports capacity to 14.1 bcf/d by the end of 2024.
Main contributors - Giovanni Staunovo, Wayne Gordon, Dominic Schnider
Original report - US natural gas : Winter is coming (or not), 7 November 2023.
