An sudden improve in Henry Hub costs is countering bearish fundamentals seen in latest weeks, Rystad Vitality Senior Analyst Lu Ming Pang mentioned in a fuel and LNG market replace despatched to Rigzone on Monday.
“Henry Hub costs have elevated to $1.84 per million British thermal items (MMBtu) final Friday 1 March, from $1.56 per MMBtu the week earlier than on 20 February,” Pang famous within the replace.
“This reverses the declining pattern in Henry Hub costs, which have usually been falling all winter.
Increased than anticipated storage withdrawals in latest weeks could have contributed to the quickly bullish sentiment,” Pang added.
The Rystad analyst famous within the replace that withdrawals from storage totaled 96 billion cubic ft from 16 to 23 February, “as temperatures turned out to be colder than beforehand forecast, inflicting a rise in web withdrawals”.
“Since then, the climate returned to regular temperatures for only a few days and is now set to be hotter than regular within the coming days,” Pang warned.
“Increased withdrawals from storage are prone to drive some bullish sentiment, resulting in a constructive achieve in Henry Hub costs,” Pang added.
“Nevertheless, any Henry Hub worth modifications within the coming months will likely be contingent on the consequences of climate on fuel consumption and corresponding withdrawals from storage,” Pang continued.
Within the replace, Pang mentioned heat climate is predicted to dominate discussions on weak U.S. fuel demand, “with the variety of heating diploma days (HDDs) anticipated to be beneath regular by way of the primary week of March”.
“A decrease variety of HDDs implies there will likely be much less demand for heating, which has been the pattern noticed all through many of the winter this season,” Pang highlighted.
The Rystad analyst additionally identified within the replace that U.S. underground fuel storage ranges have been at 2,374 billion cubic ft as of February 23, and mentioned they’ve already exceeded the five-year most of two,169 Bcf for a similar time interval.
“Backing up sentiment that storage ranges are larger than common, present storage ranges are 27 % up on the five-year common, and 12 % larger than the identical interval final 12 months,” Pang mentioned.
The Henry Hub fuel worth closed at $3.313 per MMBtu on January 12, $2.1 per MMBtu on January 31, $1.576 per MMBtu on February 20, and $1.916 per MMBtu on March 4. On the time of writing, the Henry Hub worth is buying and selling at $1.94 per MMBtu.
In a report despatched to Rigzone final week, BMI, a Fitch Options firm, projected that the Henry Hub pure fuel worth will common $3.4 per MMBtu in 2024 and $3.6 per MMBtu in 2025.
In a separate report despatched to Rigzone final week, Customary Chartered forecast that the NYMEX foundation Henry Hub worth will common $4.80 per MMBtu in each the primary and second quarters of this 12 months, and $4.70 per MMBtu in each the third and fourth quarters of 2024. Customary Chartered expects the commodity to common $4.80 per MMBtu in 2025, in keeping with that report.
In one other report despatched to Rigzone final week, J.P. Morgan projected that the U.S. pure fuel Henry Hub worth will common $2.93 per MMBtu in 2024 and $4.75 per MMBtu in 2025. That report forecast that the commodity will common $2.45 per MMBtu within the first quarter of this 12 months, $2.25 per MMBtu within the second quarter, $3 per MMBtu within the third quarter, and $4 per MMBtu within the fourth quarter.
“Whereas U.S. pure fuel costs made historic lows not seen since 1995 final week, European and international LNG costs have slid to lows not seen since earlier than the Russia/Ukraine conflict,” J.P Morgan famous within the report.
“As costs have fallen, we have now seen some fascinating feedback this earnings season that are seemingly the very results of these low costs,” the corporate added.
To contact the creator, electronic mail andreas.exarheas@rigzone.com