The outlook for warmer temperatures than earlier expected first dragged prices down to USD 5.5/mmbtu, but new models pointing to colder weather pushed them back toward USD 6/mmbtu. Larger inventory draws (about 150 billion cubic feet) are now expected to materialize in the second to last week of this year.


In the near term, we expect prices to stay supported and move higher on stronger heating demand. That said, the upside is likely to be less pronounced than anticipated, as another delay of the Freeport LNG export terminal (~2 billion cubic feet per day) restart—now planned for the end of the year after already being postponed several times—should result in a less tight US natural gas market. At the same time, US natural dry gas production has already reached a record high of 99.9 bcf/d in September, and we expect more supply growth in 2023.


With no new LNG export terminals being added in 2023 and likely weaker industrial demand due to weaker US economic growth, prices need to trade lower to slow down production growth and support demand from the power sector to prevent inventories from rising well above the 4 trillion cubic feet (tcf) mark at the end of the next injection season (end-October 2023). As such, we cut all our forecasts by USD 0.5/mmbtu.


Read the original report, CIO View: US natural gas: Negative outlook into 2023, 9 December 2022.


Main contributor: Giovanni Staunovo


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