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BofA Cuts Henry Hub Forecast  to $2.40/mmbtu in 2024

NATGAS

BofA cuts the 2024 Henry Hub price forecast from $3/mmbtu to $2.40/mmbtu but with risks from the pace of LNG increase, price sensitivity of supply, and weather.

  • Output is falling but persistent low prices are needed in 1H to keep supply depressed and curb inventory builds.
  • Low prices could support demand as coal-to-gas switching for power generation increases in the shoulder season. US natural gas demand is projected to increase 2.1bcf/d y/y due to rising residential/commercial and industrial consumption and exports via LNG and to Mexico.
  • Pipeline flows suggest production is already responding to low prices. Some of the decline could be due to midstream maintenance but also from slowing E&Ps well starts and possibly from operational wells.
  • Lower 48 gas production is forecast to remain below 102bcf/d in summer before rising to 103bcf/d by December 2024. Many E&Ps are maintaining output ahead of expected LNG demand growth in 2H24-2025 while the curve is in steep contango.
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