Spot gas prices of less than $2/MMBtu are highly likely in the waning days of summer due to brimming storage and continued strong production growth, a Bentek Energy report stated Thursday.
Evergreen, Colorado-based Bentek, which is a unit of Platts, noted in the report that by the end of January power burn in the US was averaging 4.6 Bcf/d greater than the five-year average of 21 Bcf/d. At sub-$2/MMBtu levels, gas is competing with some 24.3 Bcfe/d of coal, it added.
Northeast production is expected to grow by 900,000 Mcf/d through the summer, driven by a large backlog of some 1,000 uncompleted wells in the region, Bentek said.
As such, Bentek expects Henry Hub cash to average $2.32/MMBtu over the summer with monthly average peaks as high as $2.70/MMBtu during peak summer month. Moreover, Henry Hub could return to $1 handles during the shoulder months of September and October as demand declines and storage fills.
To access a complete copy of this report, please visit www.platts.com