US Gas Prices Fall as Exports Soar

The price of gas for July delivery at the US Henry Hub hit a three-year low of $2.324/mn Btu June 6, the lowest price for front-month delivery since May 31, 2016. This is despite low gas storage stocks and rising gas exports, the Energy Information Administration said June 14. There had been concerns before the export terminals were built that US exports would push US hub prices up as demand for gas rose.

Much of the LNG is arriving in Europe. China, a major gas buyer, has slapped retaliatory tariffs on US LNG. With even more US LNG capacity coming on stream and Russian and Norwegian exports also strong, European storage facilities are expected to be filled by August, a few months earlier than normal. There has been talk of some production facilities being shut in this summer as the liquefaction and shipping costs from the US might exceed market prices.

For the week ending June 7, working natural gas in underground storage totalled 2.088 trillion ft³, 9.9% lower than the five-year average for this week. Storage levels are however forecast to start the withdrawal season near the five-year average of 3,730bn ft³ of working gas, with forecasts of above-average net injections through October.

Since the start of June, gas supplied to US liquefied natural gas (LNG) export facilities averaged 5.3bn ft³/day, 6% lower than in May 2019, according to Point Logic Energy data. In May 2019, natural gas feedstock deliveries to US LNG export terminals were at record-high levels, averaging 5.7bn ft³, 65% higher than the 2018 annual average.

LNG exports for the first three months of 2019 averaged 4bn ft³/d, 1bn ft³/d more than the annual average in 2018. Natural gas exports by pipeline from January to March 2019 averaged 8.3bn ft³/d, an increase of 7% from the 2018 annual average. EIA forecasts growth in natural gas exports to continue, with total natural gas gross exports in 2019 averaging 12.4bn ft³/d, up a quarter on 2018.