LITTLETON: The northern hemisphere summer has not yet officially finished, but United States natural gas markets are already sizing up supply and demand balances for this winter and the next year, and indicate that sharply higher prices may emerge.

Forward markets for Henry Hub futures, the benchmark U.S. natural gas price, indicate that prices will average $3.20 per million British thermal units (mmBtu) in 2025, compared to an average of $2.22 so far this year, data from LSEG shows.

If realized, that roughly 44% year-on-year price increase would be the steepest annual climb since 2022, and could worsen energy product inflation trends despite a slowdown in broader price gains in the United States.

MOOD SWING

The bullish outlook in forward markets contrasts with fairly downbeat mood in U.S. gas markets so far in 2024.

U.S. futures plumbed 4-year lows in the spring as major storage hubs emerged from last winter with bloated stockpiles after mild temperatures during the traditionally coldest months of the year cut gas use for heating.

Inventory levels have remained around 10% above the long-term average since, and have limited price progress throughout this past summer even as higher demand for cooling systems lifted national gas consumption in July and August.

Prices then slumped around 3% on Monday on expectations that a storm forecast to hit Louisiana later this week would cut gas demand by causing power outages and reduced gas use by liquefied natural gas (LNG) export plants.

Additional storms off the Louisiana coast this fall will likely make further disruptions to key gas demand centers in the region, even as gas supply hubs farther inland continue to operate at near record levels.

Through the first eight months of 2024, average U.S. dry gas production hit a record of 102.5 billion cubic feet per day (Bcf/d), according to LSEG.

That total was up around 0.3% from the same months in 2023, and is 9.5% above the average daily production rate from 2020 through 2022.