Pure fuel spot costs at Henry Hub will common $2.65/MMBtu within the second quarter earlier than climbing above the $3 mark in 3Q2023 amid elevated consumption and flat home manufacturing, in response to up to date projections from the Power Data Administration (EIA).
Henry Hub costs additionally averaged $2.65 within the first quarter as “spring-like” temperatures tamped down demand in early 2023, the company famous in its newest Quick-Time period Power Outlook (STEO) launched April 11.
Nevertheless, costs are poised to rise later this yr as summer time cooling demand kicks in and as manufacturing volumes stay “comparatively flat,” in response to the most recent STEO.
“We count on comparatively flat U.S. pure fuel manufacturing, rising demand for feed fuel from Freeport LNG because the export terminal returns to full operations, and elevated pure fuel consumption within the electrical energy sector to boost pure fuel costs by way of the summer time,” researchers stated. “We forecast the Henry Hub worth to common barely greater than $3.00/MMBtu in 3Q2023.”
U.S. dry pure fuel manufacturing averaged 101.6 Bcf/d through the first quarter of 2023, a 1.4% improve over 4Q2022 output, with gentle winter climate limiting disruptions from freeze-offs, EIA stated.
The newest STEO modeled common home manufacturing of 100.9 Bcf/d for full-year 2023, a 3% improve over 2022 output.
“If manufacturing have been to extend by greater than our forecast, it might put downward stress on pure fuel costs,” researchers stated. “Alternatively, if declines are greater than in our forecast, it might seemingly result in greater costs, different elements equal.”
Pure fuel exited the injection season at an estimated 1,856 Bcf, or a 19% surplus to the five-year common, in response to EIA.
The newest STEO modeled a complete stock improve of 1,985 Bcf for April by way of October, in step with the five-year common for injections for the interval. This would depart end-October inventories at 3,842 Bcf, or 6% above the five-year common.
“In the end, pure fuel inventories on the finish of October will depend upon temperatures all through the summer time,” which can even affect the trajectory of pure fuel costs, researchers stated.