Investing.com – Temporary disruptions at export terminals and increased production have caused U.S. prices to fall in recent weeks, according to a UBS research note on Tuesday. This trend is mainly driven by concerns about congestion.
Despite the current situation, UBS maintains a positive 12-month outlook for US natural gas, although the company advises investors to remain cautious due to high roll costs impacting performance.
UBS expects that higher prices will be needed in 2025 to meet increasing export demand. U.S. natural gas inventories currently exceed the five-year average and stand at 3.2 trillion cubic feet as of July 12, which is 16.9% or 465 billion cubic feet above the 2019-2023 average.
While this surplus is less than the 678 billion cubic feet excess over the five-year average recorded in mid-March, it still represents a significant surplus.
Concerns that supplies could reach capacity limits towards the end of the injection season (end of October) have revived, causing prices to fall from above USD 3/mmbtu in mid-June to almost USD 2/mmbtu in mid-July.
Hurricane Beryl caused disruptions at liquefied natural gas (LNG) export terminals, reinforcing these fears of congestion. U.S. LNG exports temporarily fell from 13 billion cubic feet per day (bcf/d) to below 11 bcf/d before rebounding to above 12 bcf/d.
The continued recovery in U.S. natural gas production has also contributed to these concerns.
UBS remains optimistic about US natural gas prices in the coming year, driven by the launch of new LNG export terminals and increased pipeline exports to Mexico. However, it is now expected that the Golden Pass export terminal will be put into operation by the end of 2025, instead of the end of 1H25 as initially expected.
