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Natural Gas Price Prediction and Forecast.

Tue Sep 14 2021 14:07
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Natural gas investors have experienced a great year as the sector continues to perform exceptionally than before. Natural gas has traded at its highest level since 2014, surpassing many other commodities, including oil. 

 Natural gas is among the most used non-renewable hydrocarbons. The price of this commodity impacts most households, directly or indirectly. Its price may fluctuate occasionally, but it has been stable enough to increase the number of investors. 

However, investors need to be careful when investing in natural gas. Beware of the natural gas forecasts and price predictions so that you may make a sound investment decision that will pay out well. 

Look for various price prediction forums and compare information from different experts and bodies before trading natural gas. This article is all about natural gas price predictions and other discussions corresponding to the commodity. Read on to find the appropriate information to help you make an informed investment in natural gas.

How is the Natural Gas Market Performing?

The gas is usually measured using British Thermal Units (BTU). According to OilPrice.com the natural gas futures were recently trading to $5.03 per million British thermal units (MMBtu), which was up 0.6%. That was its highest trading price since 2014. Natural gas prices have been up 107.9% since the year started up to date. 

The rising prices of natural gas are influenced by the increased demand for gas and a supply crunch. Hurricane Ida has greatly affected the supply of natural gas as there is an ever-increasing demand with a supply shortage. 

Natural Gas Pricing Prediction

Predictions for the pricing of natural gas may differ from one expert to the other. Various experts have short and long-term natural gas forecasts on how the prices will be in the future. Here are some predictions to help you decide on natural gas investment.

Natural Gas Forecast According to EIA

U.S. Energy Information Administration offers independent and unbiased energy information to help the public understand the relation of energy to the economy and environment. It also aids in legislation and promoting efficient markets. 

EIA forecasts the price of natural gas at Henry Hub will average $3.07 per million British thermal units (MMBtu) in 2021, which is a 51% increase from the 2020 average.

The Henry Hub prices are anticipated to drop to $2.93/MMBtu in 2022 due to the slowing decreased growth of Liquefied Natural Gas exports and the increasing production of natural gas in the US. 

Natural Gas Price Overview According to World Bank

World Bank, through its Commodity Markets Outlook, predicts the natural gas cost in the United States to be approximately the same as the present levels through the remaining period of 2021. The price will amount to $2.80/MMBtu, signifying a 39% increase from 2020. 

 World Bank expects different import prices of natural gas in Europe and Japan in 2021. It predicts a steep increase in European prices and a small decrease in Japanese prices. 

The world bank forecasts the price of natural gas at the Henry Hub to be $3.16/MMBtu in 2024 and an optimistic $4/MMBtu in 2030. 

Natural Gas Forecast According to FX Empire

FX Empire predicts an increase in the price of natural gas over the coming weeks. According to FX Empire, the adverse effects of Hurricane Ida disrupted the supply of natural gas and led to a decrease in inventory levels. That will lead to an increase in the prices of natural gas.

Natural Gas Forecast According to IMF

International Monetary Fund (IMF) forecasts natural gas prices at $2.65/MMBtu in 2024. There is an expectation of exports increasing next year, from 14 billion cu ft in 2021 to 19 billion cu ft in 2022.

Primary Commodity Prices:  https://www.imf.org/en/Research/commodity-prices

Factors Determining the Price of Natural Gas

The prices of natural gas are influenced by demand and market supply. When the supply of natural gas increases, its price decreases, and if the supply dips, the prices will also rise. An increase in demand will lead to high prices, while a decrease in demand will have prices of gas dropping. 

According to the U.S. Energy Information Administration, the most common factors that may affect natural gas pricing and demand include: 

Economic growth

The natural gas sector is influenced by the strength of the economy. When there is growth in the economy, there will be an increased demand for products and services, which may increase the utilization of natural gas by commercial and manufacturing sectors.

Extreme weather interrupting supply

Extreme weather like hurricanes, tornadoes, and other severe weather conditions may influence natural gas pricing. Natural gas prices have in the past been affected by severe weather, the most recent being Hurricane Ida.

77% of oil and gas production is still offline in the Gulf of Mexico. The decrease in gas production has caused natural gas inventories to lower by 17% compared to 2020 and 7% below the five-year average. It has caused inflation of prices, which have surpassed the previous record.

Winter and summer weather affecting household and commercial demand

During the cold season, the demand for natural gas usually increases for heating purposes, and this may cause the prices to increase if the demand is too high than supply speeds. 

The price is also affected when an unforeseen cold or extreme weather occurs because the supply cannot match the demand faster during a short-term rise in demand.

Hot weather conditions like summer increase the demand for air conditioning, which relies on electricity. The demand for natural gas to meet the demand for electric power will go up, which can also cause the prices of natural gas to rise.

Natural gas in storage

Natural gas inventories have a huge influence on the prices and general supply of gas. The amount of natural gas in storage is essential to meeting the demand during peak seasons and unexpected increases in demand.

During April through October, when the demand for natural gas is usually low, storage takes up the excess domestic supply. The levels of storage decrease from November to March, when the demand for natural gas for heating is high.

Competition with other types of fuel

High-volume energy consumers like power plants, steel, and iron mills may switch between natural gas, petroleum, and coal, based on the price of each fuel. When the prices of other fuels are low, the demand for natural gas will decrease, lowering natural gas prices.

The decrease in the price of natural gas relative to other competing fuels will lead to an increase in the demand for natural gas, making the prices go up.

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With what you know now regarding natural gas and how to evaluate the market, consider investing in it. You may end up with good profits when you invest in natural gas, especially if you go for a long-term investment.

At XOSignals, we provide trading signals that will guide you into entering numerous markets at the appropriate time. Register for free or upgrade to VIP, which has more advantages like daily market signals, long-term strategies, SMS trading signals, and United States stocks analyses.

From the natural gas price overview, it is evident that there will be a profitable future for investors in this sector. Meeting the high demand is hard due to the supply crunch, and the decrease in stored natural gas will drive up prices. 

You should go through the forecasts and make a sound investment at the right time to reap the profits.
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