On June 6, the price of the Henry Hub natural gas near-month futures contract at the New York Mercantile Exchange (NYMEX) closed at a three-year low of $2.324 per million British thermal units (MMBtu), its lowest price since May 31, 2016. In addition, according to Natural Gas Intelligence, on June 11, the spot price of natural gas at the Henry Hub closed at $2.34/MMBtu, the lowest price since November 17, 2016. For the past month, the daily spot prices of natural gas at most hubs have been lower than the Henry Hub price. With seasonally mild temperatures in some regions of the country, low prices are occurring despite relatively low natural gas inventories and increasing demand for U.S. natural gas exports.
Natural gas storage inventories
For the week ending June 7, working natural gas in underground storage totaled 2,088 billion cubic feet (Bcf), 9.9% lower than the five-year average for this week. Despite the relatively low levels of inventories, the average rate of net injections into storage is 44% higher than the five-year average so far in the refill season, which started in April this year. The injection season started at the lowest storage level since 2014, although storage levels are forecast to start the withdrawal season near the five-year average of 3,730 Bcf of working gas, with forecasts of above-average net injections through October.
U.S. natural gas exports
Since the start of June, natural gas supplied to U.S. liquefied natural gas (LNG) export facilities averaged 5.3 billion cubic feet per day (Bcf/d), 6% lower than in May 2019, according to Point Logic Energy data. In May 2019, natural gas feedstock deliveries to U.S. LNG export terminals were at record-high levels, averaging 5.7 Bcf/d, 65% higher than the 2018 annual average. The United States has seen rapid growth in natural gas exports for the past several years, a trend that has continued into 2019. Exports of LNG for the first three months of 2019 averaged 4.0 Bcf/d, 1.0 Bcf/d higher than the annual average in 2018. Natural gas exports by pipeline from January to March 2019 averaged 8.3 Bcf/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 12.4 Bcf/d, 2.5 Bcf/d (25%) higher than in 2018.
The Henry Hub spot price will average $2.77/MMBtu in 2019 and in 2020, 12% lower than the 2018 average of $3.15/MMBtu, according to EIA forecasts. Natural gas spot prices are expected to remain relatively low through 2019 because of continued record growth in U.S. natural gas production. EIA forecasts that U.S. dry natural gas production will average 90.6 Bcf/d in 2019, 8.6% higher than the 2018 daily average production.
