Q1 Henry Hub spot forecast rises 52 cents to $4.34/MMBtu
Company increase Q1 fuel demand forecast by 3.42 Bcf/d
The US Vitality Info Administration bumped up its US pure fuel demand and value forecasts for the primary quarter of 2022, following a colder-than-normal January within the Northeast and Midwest and anticipating continued sturdy demand for US LNG exports.
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EIA, in its February Brief-Time period Vitality Outlook, raised its pure fuel consumption estimates by 3.42 Bcf/d to 102.47 Bcf/d for Q1, and by 650 MMcf/d to 71.56 Bcf/d for Q2. It additionally pushed up its consumption forecasts by 1.50 Bcf/d to 84.27 Bcf/d for 2022 on common, and by 1.01 Bcf/d to 83.85 Bcf/d in 2023.
Colder-than-normal climate in January elevated demand for fuel used for area heating and energy technology, the company mentioned, noting the spot value at Henry Hub averaged $4.38/MMBtu for the month, up from $3.76/MMBtu in January.
“EIA forecasts that pure fuel costs will rise to $4.70/MMBtu on common in February, then common round $3.80/MMBtu for the final three quarters of the yr,” the company mentioned within the press launch accompanying the report. Extremely variable winter climate forecasts create “a big quantity of uncertainty” within the forecast, it added.
The February report raised EIA’s forecast for Q1 Henry Hub pure fuel spot costs by 52 cents to $4.34/MMBtu. The Q2 forecast additionally rose 4 cents from the earlier month’s estimates to $3.82/MMBtu, and the total yr 2022 estimate climbed 13 cents to $3.92/MMBtu. The company, nevertheless, estimated 2023 costs can be decrease, averaging $3.60/MMBtu.
“We count on pure fuel costs may stay unstable over the approaching months, and the best way that temperatures have an effect on pure fuel demand in February and March will likely be a key driver of how inventories finish the withdrawal season, which will likely be necessary for pure fuel value formation within the coming months,” the report mentioned.
EIA anticipated fuel consumption will common 105.2 Bcf/d in February, 3% beneath February of 2021, pushed by residential and industrial sector declines. Energy sector consumption in February is anticipated to be down 1% from the prior yr, partly offset by a 4% improve in industrial sector consumption.
LNG results
The company cited the position of US LNG exports in “limiting among the downward strain” on US fuel costs, amid lower-than-average European inventories and huge costs variations between Henry Hub and spot costs in Europe and Asia.
“We count on excessive ranges of US LNG exports to proceed into 2022, averaging 11.3 Bcf/d for the yr, a 16% improve from 2021,” the outlook mentioned. “The forecast displays our assumptions that world pure fuel demand stays sturdy and that anticipated further US LNG export capability comes on-line.”
The colder begin to the yr pulled fuel inventories beneath the five-year common, ending the month at 2.3 Tcf. With a drop of about 730 Bcf/d exected for the remainder of the withdrawal season, EIA expects inventories to finish March at 1.6 Tcf, or 8% beneath the five-year common.
Turning to manufacturing, EIA lowered lowered by 540 MMcf/d to 103.67 Bcf/d its complete pure fuel marketed manufacturing estimate for the US within the first quarter. But it surely stored its Q2 manufacturing forecast roughly flat, reducing it by 10 MMcf/d to 103.78 Bcf/d.
In January, it mentioned dry fuel manufacturing was down 2.1 Bcf/d from December ranges, partly as a consequence of freezing temperatures in some areas.
However EIA anticipated progress forward.
“We forecast [dry] pure fuel manufacturing to common 95.6 Bcf/d in February and 96.1 Bcf/d for all of 2022, pushed by pure fuel and crude oil value ranges that we count on will likely be ample to assist sufficient drilling to maintain manufacturing progress,” the outlook mentioned.
Nonetheless, complete marketed manufacturing is anticipated to common 104.39 Bcf/d in 2022 and 106.55 Bcf/d in 2023, up from 101.45 Bcf/d in 2021. The common annual estimates for 2022 and 2023 exceeded the prior month’s forecasts by 70 MMcf/d and 460 Mcf/d respectively.
Rising renewables
Turning to the facility aspect, EIA mentioned that regardless of anticipated declines in the price of fuel delivered to turbines, the share of fuel within the producing gasoline combine is anticipated to lower from 37% in 2021 to common 35% in 2022 and 2023, due to progress in renewables.
“EIA expects that renewable sources will present 22% of US electrical energy technology in 2022 and 24% in 2023, up from 20% in 2021,” the company mentioned. It highlighted utilities’ plans so as to add 12 GW of wind energy capability and 46 GW of utliity-scale photo voltaic over the subsequent two years.
Photo voltaic additions are anticipated to account for almost half of latest technology in 2022, EIA mentioned, and small-scale photo voltaic can be seen rising 4.4 GW yearly in 2022 and 2023.
Renewables are additionally seen consuming into the share of coal-fired technology, which is estimated to say no to 22% over the subsequent two years from 23% in 2021.