In its June 2022 Short-Term Energy Outlook, the agency said it expects US natural gas spot prices to increase again in June and remain high through the rest the year.
Spot prices at the Henry Hub benchmark in Louisiana averaged US$8.14/ MMBtu in May 2022, and the EIA expects it to rise to US$8.71/MMBtu from June through August.
The agency attributed this to “lower-than-average natural gas inventories resulting from factors affecting both supply and demand.”
Consumption of natural gas in the US’ electric power sector has remained high despite high prices, and EIA expects the consumption of natural gas in this sector will average 0.9 billion cubic feet per day (Bcf/d) more in 2022 than in 2021, despite high prices.
But by early 2023, the agency expects natural gas prices to fall as domestic production grows.
In addition, the EIA anticipates US LNG exports to remain high, partly as a result of Russia’s war in Ukraine. 75% of the nation’s LNG cargoes have gone to Europe, compared with 34% in 202.
LNG imports to the EU and the UK hit a record high in April 2022, averaging 16.5 Bcf/d monthly and exceeding 19 Bcf/d on some days in April.
The increase was attributed to natural gas storage inventories being at historically low levels from Q3 2021 through Q2 2022. The higher spot prices in Europe have resulted in more imports from suppliers with destination flexibility in their contracts, particularly from the United States.
The recent accident at the Freeport export facility in Texas could also spell trouble for Europe. A fire broke out at the liquefaction site 8 June and the operator does not anticipate a return to full plant operations until late 2022.
On average, nearly 76% of exported volumes from Freeport (in 2022) are uncontracted and will likely impact Europe the hardest.