Baku, Azerbaijan, July 9
By Leman Zeynalova - Trend:
Liquefied natural gas (LNG) exports from US plants will continue to disrupt LNG markets as low costs Henri Hub (HH) feedgas will prove key to maintain high volumes of exports as LNG prices face downside pressures, Trend reports with reference to Fitch Solutions Macro Research (a unit of Fitch Group).
However, the increased demand for HH gas for LNG exports will be comfortably met by existing fields, according to the company.
“We recognize the lack of sustained upside price pressure and, as a result, lower our HH forecast whereby prices will average $2.8 5/mmBTU in 20 19 and $2.9 5/mmBTU in 2020,” reads the report released by Fitch Solutions.
The company believes that production of US natural gas will grow by 8.3 percent y-o-y in 2019 and 1.7 percent in 2020 after an estimated 11.5 percent gain in 2018.
“Producers will accelerate well completions and boost output as new pipeline capacity becomes available
LNG exports will moderate in 2020 following the 2019 start-up of an additional 22.4bcm (17.05mpta) of liquefaction capacity, with shipments expected to reach over 40.0bcm from 30.6bcm in 2018.
Thermal coal prices will end lower, putting downward pressure on HH Increasing LNG exports fail to support US natural gas prices as growth in supplies has a firm cap on benchmark prices,” reads the report.
The Fitch Solutions experts pointed out that a mostly mild start to summer has reduced power demand and limited drawdowns of gas storage. “Another strong winter heating season could see prices rise if the injection season (April 1 to October 30 ) fails to adequately boos t storage which currently hovers below the five-year average. The same conditions saw prices rise during a cold snap in late 2018 with prices peaking above $4 .50 /mmBTU; prices quickly retreated back below $3.0 0 /mmBTU by the start of 2019. “
Total degree days - which measure the amount of heating and cooling demanded - reached record highs in 2018, reads the report.
“We see more impacts for extreme weather events supporting spikes in demand and higher overall consumption for 2020. However, so far this has proved insufficient to boost Henry Hub (HH) prices as a strengthening supply picture limited price gains, a trend we believe will cap upside.”
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