An unseasonably warm winter in Europe and the United States poses a downside risk to market watchers' natural gas price forecasts for 2023. Will the Natural Gas price decrease in the coming days and months? What is the Natural Gas price prediction for the next 5 years?
Due to a decline in demand and an abundance of supply, the price of natural gas in Europe has reached the level it was before Russia's invasion of Ukraine. Prices for natural gas have decreased both in the US and in Asia.
The New York Mercantile Exchange's (NYMEX) Henry Hub natural gas futures contract for the month ahead has likewise dropped from $9 in September to roughly $2.5/MMBtu.
The European benchmark gas futures price has fallen more than 80% from its record high in late August 2022, while the Asian benchmark price has dropped more than 60%.
Will natural gas prices increase once more as a result of further cuts in Russian gas production and recovering gas demand in China after the nation completely lifted the Covid-19 restriction?
Natural Gas prices fluctuate constantly, depending on factors such as supply and demand, weather, and the viability of alternative resources. As a traded asset, Natural Gas (NGAS) is popular due to its volatility, high liquidity and reasonable spread.
Follow the Natural Gas price chart for live data and read our latest Natural Gas forecast and price predictions for 2023 and beyond. Key pivot points and support and resistance levels provide further insights to help you make informed trading decisions.
Natural Gas Price Prediction – Summary
- Natural Gas price prediction today: The lack of momentum in gas drilling and associated production reflects the lack of certainty about future prices. Gas prices are still very much influenced by the regional forces affecting weather and storage levels.
- Natural Gas price prediction 2023: EIA anticipates above-average storage inventories to lower natural gas prices in 2023. Experts predicted that Henry Hub prices will be roughly $3.40/MMBtu on average in 2023.
- Natural Gas price prediction for the next 5 years and beyond: Rating agencies continue to expect price moderation due to lower economic growth, which will reduce demand in the short term while easing geopolitical pressures in the longer term will lead to further price declines.
With CAPEX.com you can trade Henry Hub Natural Gas futures through CFDs if you want to speculate on price movements or invest in Natural Gas stocks and Energy ETFs.
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Natural Gas Fundamental Outlook
Natural gas accounts for almost a quarter of the United States energy consumption. The NYMEX Division natural gas futures contract is widely used as a national benchmark price. The futures contract trades in units of 10,000 million British thermal units (mmBtu). The price is based on delivery at the Henry Hub in Louisiana, the nexus of 16 intra- and interstate natural gas pipeline systems that draw supplies from the region's prolific gas deposits. The United States is the biggest natural gas producer followed by Russia.
Natural gas prices
The mildest winter since 2006 decreased the amount of natural gas used for space heating and drastically altered most natural gas price predictions in the months to come. In January, the Henry Hub spot price decreased by more than $2/MMBtu from December to an average of $3.27 per million British thermal units (MMBtu). In the United States, there were 9% fewer heating degree days (HDDs) than expected in the January STEO and 16% fewer HDDs than the 10-year average in January. Natural gas use was lower than anticipated, therefore U.S. natural gas reserves finished January above the previous EIA projection.
Prices for natural gas are still quite erratic. Extreme weather and production freeze-offs may still result in price increases at the Henry Hub and in local markets, but this risk is lowering as spring approaches, especially now that stockpiles have risen back above the five-year (2018-2022) average. Although EIA anticipate normal temperatures for February and March, lower temperatures than anticipated may cause a price increase. When fully operational, the Freeport LNG export project, which was shut down in June due to a fire, is anticipated to reopen in the first quarter of 2023 and will likely increase the demand for natural gas in the U.S. market by more than 2 billion cubic feet per day (Bcf/d).
Natural gas markets
Over the past few months, U.S. natural gas supply growth has outpaced demand growth, which has lowered natural gas prices. According to EIA calculations, the US produced 100.2 Bcf/d of dry natural gas on average in January. For the most of this year, the agency estimates dry natural gas production to remain roughly at 100 Bcf/d; generally, they anticipate dry natural gas production to average between 100 Bcf/d and 101 Bcf/d in 2023. Due to the unusually mild weather in January, there was a lower-than-average demand for space heating in the United States.
For the majority of 2023, EIA anticipates lower demand for natural gas than last year due to lower demand in the electric power sector as more renewable electric generation sources come online year-round and lower demand in the industrial sector as a result of a predicted decline in manufacturing activity. Due to the substantial natural gas stock levels in Europe, they anticipate utilization at U.S. liquefied natural gas (LNG) export facilities to be slightly lower in the upcoming months compared to the earlier predictions. But U.S. LNG exports in their forecast rise once the Freeport facility is back online, and LNG exports increase by 11% (1.2 Bcf/d) on an annual basis in 2023 compared with 2022.
Natural gas storage
EIA forecast that natural gas storage inventories would surpass 1.8 trillion cubic feet (Tcf) by the conclusion of the withdrawal season (November through March), which would be 16% more than the five-year average and 19% higher than what the agency predicted in the January STEO. The end of January storage inventories was higher than the five-year (2018-2022) average due to lower natural gas storage withdrawals as a result of the warmer-than-average January temperatures. From 2022, when end-of-March storage inventories were 1.4 Tcf, 17% below the prior five-year (2017-2021) average, EIA anticipates above-average storage inventories to lower natural gas prices in 2023.
Natural Gas Technical Outlook
Henry Hub prices started 2022 below US$4/mmbtu and peaked at just under US$10/mmbtu in the summer before setting between US$5 and US$6 in the fall. During some of the most volatile periods, prices dropped by 40% before climbing 75%, all within a span of three months.
Since mid-December natural gas prices dropped from $7.5 to $2.5 and seem undervalued according to trading indicators shows.
The price is currently trading on the lower band of a descending channel after completing a Head and Shoulders top pattern.
Looking at the Nat Gas daily chart, we can see that multiple Doji candlestick patterns have been forming since prices approached the 100% Fibonacci extension level at 2.326. This is an increasing sign of indecision, which can at times spell a reversal within the context of trending markets. Positive RSI divergence is also present, showing that downside momentum is fading.
A turn higher would likely place the focus on the 20-day Simple Moving Average (SMA). The latter could reinstate the dominant downside focus. If not, a confirmatory upside close above the SMA could open the door to a broader reversal. That would place the focus on lows from December 2021 around $3.50. The latter could hold as new resistance.
Otherwise, extending lower would place the focus back on the downside. That exposes the 114.6% extension at $1.50 towards lows from 2020.
Natural gas price predictions 2023
The expectations for the February STEO have changed significantly as a result of the January happenings. By 2023, EIA expects Henry Hub's natural gas prices to average around $3.40/MMBtu and to remain around $4.00/MMBtu until the end of the year. In the January STEO, the agency predicted that Henry Hub prices will be roughly $5.00/MMBtu on average in 2023.
At the end of 2022, Fitch Ratings’ natural gas forecast for 2023 saw Henry Hub average $5 per 1,000 cubic feet (Mcf), dropping from $6.75 in 2022. The US gas price was expected to drop further to $3 in 2025, according to the firm’s natural gas price forecast for 2025. The Henry Hub natural gas price prediction for the next 5 years is $2,75/Mcf.
As for the European natural gas price forecast for 2023, Fitch Ratings predicted Dutch TTF to average $40/Mcf, a downward revision from the previous estimate of $45. The price was estimated to be $10/Mcf in 2025 from $20 Mcf in 2024 and stay at $5.0/Mcf in 2026 and beyond.
Trading Economics’ Europe natural gas forecast saw the fuel trading at €84.61/MWh by the end of the first quarter of 2023, rising to €115.31 in 12 months, as of 5 January 2023.
In a natural gas forecast on mid-December, ANZ Research saw LNG spot price averaging $32/MMBtu in 2023, falling from $36.8/MMBtu in 2022. The price of super-chilled natural gas was projected to drop by 26.5% to $23.5 in 2024.
The World Bank in October 2022 forecast US natural gas prices could average $6.20/MMBtu in 2023 on weaker demand as households and industries curbed consumption and switch to substitutes. It expected European gas prices to trade at $32 in 2023. As for LNG, the bank predicted it would average $17/MMBtu in 2023, falling from $18.40 in 2022.
Algorithm-based forecasting service Wallet Investor was bullish on its natural gas price forecast for 2023, noting that it was a very good long-term (one-year) investment. The service expected the natural gas price to trade at $5.570/MMBtu in December 2023.
Natural gas forecast for the next 5 years
Will natural gas prices continue to decrease in the next 5 years?
At the beginning of 2023, Bank of America (BofA) Global Research forecast the US Henry Hub gas price to steadily decline to $4.50/MMBtu by December 2023 from $6.50 in December 2022.
The Henry Hub gas price was expected to edge down to an average of $6.5/MMBtu in 2023 from an average of $7.0/MMBtu in 2022, according to Fitch Solutions’ forecast on 8 December 2022. The US natural gas price was predicted to drop to $5.75 in 2023. It forecast the UK’s natural gas price National Balancing Point (NBP) to average $34.8/MMBtu in 2023, dropping to $39.0/MMBtu in 2022.
Multinational lender ABN-AMRO on 12 December forecast saw natural gas prices falling to $6.5/MMBtu in 2023 and dropping further to $5 in 2024, from $7.30 in 2022.
ANZ Research forecast the LNG spot price to drop to an average of $32/MMBtu in 2023 and $23.5/MMBtu in 2024, compared with an estimated $36.8/MMBtu in 2022.
The World Bank forecast US natural gas prices could average $6 in 2024. It expected European gas prices to trade at $28 in 2024, dropping from $40 in 2022. As for LNG, the bank predicted it would average $15.90 in 2024, falling from $18.40 in 2022.
In its natural gas price forecast for 2025, Wallet Investor’s system projected the fuel to rise to $8.798/MMBtu by December, climbing to $12.013 by January 2028.
Natural gas forecast for 2030-2050
While analysts typically did not provide a long-term outlook for natural gas prices, algorithm-based price prediction services can offer such forecasts by assessing historical data. Let’s take a look at what the future price of natural gas could be.
Fitch Rating’s long-term natural gas price forecast on 5 December expected Henry Hub to average $2.75 per 1,000 cubic feet (Mcf) and Dutch TTF to average $5.0/Mcf in 2026 and beyond, dropping from $3/MMBtu and $10/MMBtu in 2025 respectively. The firm did give any predictions for how much gas would cost in 2030.
Deloitte’s natural gas price forecast for 2030 in September saw Henry Hub trading at $5.40/Mcf, down from $8.50/Mcf in 2022. The firm’s natural gas price forecast for 2040 expected the US gas price to rise to $6.55/Mcf.
In 2041, Henry Hub was expected to trade at $6.70/MMBtu. It did not give a natural gas price forecast for 2050, but Deloitte projected Henry Hub’s prices to increase by 2% per year after 2041.
Most analysts are highly cautious about providing long-term natural gas price forecasts due to the volatility of the energy market.
When looking for future gas price predictions and attempting to assess the long-term outlook for natural gas prices, bear in mind that analysts’ forecasts can be wrong. Analysts’ projections are based on making fundamental and technical studies of the asset’s performance, but past performance never guarantees future results.
Always do your own research and remember that your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you feel about losing money. Never invest more money than you can afford to lose.
Natural gas historical performance
Natural gas prices soared from the second half of 2020 to the third quarter of 2022, owing to rising post-Covid-19 demand and concerns about Russia’s supply after it invaded Ukraine in February 2022.
In the fourth quarter of 2021, uncertainties regarding Russia’s supply bolstered the price rally, according to Cedigaz. Europe’s natural gas price reached its highest price for 2021 at €187/MWh on 21 December, before retreating to €70 on the last day of 2021.
Dutch Title Transfer Facility (TTF), the European gas price benchmark futures, rose almost 268% in 2021, while JKM rose 113%. US natural gas prices increased by almost 47% in 2021.
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FAQs on Natural Gas Price Predictions
Will Natural Gas prices decrease or increase during 2023?
The lack of momentum in gas drilling and associated production reflects the lack of certainty about future prices. Gas prices are still very much influenced by the regional forces affecting weather and storage levels. EIA anticipates above-average storage inventories to lower natural gas prices in 2023. Experts predicted that Henry Hub prices will be roughly $3.40/MMBtu on average in 2023.
Will Natural Gas prices rise in the next 5 years?
Rating agencies like EIA continue to expect price moderation due to lower economic growth, which will reduce demand in the short term while easing geopolitical pressures in the longer term will lead to further price declines.
What are the Natural Gas price predictions for 2030?
Deloitte’s natural gas price forecast for 2030 in September saw Henry Hub trading at $5.40/Mcf, down from $8.50/Mcf in 2022.