Natural Gas Price Trend and Forecast

Regional Price Overview

Get the latest insights on price movement and trend analysis of Natural Gas in different regions across the world (Asia, Europe, North America, Latin America, and the Middle East & Africa).

Natural Gas Price Trend for the October-December of 2023

Asia

As the winter months approached, Asian natural gas prices decreased, adhering to the opposite of the usual seasonal trend due to an oversupply and insufficient demand. Natural gas exports to Indian ports decreased because the country's domestic production could meet demand, which in turn suggested that the country's industrial sector was slowing down. In China and Japan, the trend of natural gas prices was reversed due to excessive imports from the US and the decline in the economic and industrial development of the countries, exerting a negative impact on the Natural Gas Price Trend.

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Europe

The economy of European countries shrank by a great margin which led to the downfall in the prices of natural gas. The high rates of interest charged by the banking sector, lack of skilled labor, and budget crisis have consecutively hit the European sector, and thus, the natural gas market has found it increasingly difficult to sustain. A dip of almost 0.3 percent was observed in Germany's economy in the fourth quarter, which further boosted the government spending while the consumers were hesitant and, in view of the energy crisis, opted for alternate means of energy production.

North America

The US Energy Information Administration has significantly lowered its cost of natural gas in the winter months or the fourth quarter of 2023. The cause of this move was the robust domestic natural gas production, lower-than-expected demand, and the ample availability of natural gas in the inventories. The inventories also escalated on account of poor exports from the Panama Canal channels and the low appetite of overseas consumers. These antagonistic factors thus prompted the decline in the quoted natural gas prices.

Analyst Insight

According to Procurement Resource, the price trend of Natural Gas are estimated to improve in the coming quarter, especially in Asian countries, given the rise in initiatives of the government.

Natural Gas Price Trend for the July-September of 2023

Asia

The Asian natural gas market witnessed bullish sentiments throughout the third quarter of 2023. The steady demands amid rising upstream cost pressure supported such prices of natural gas. Further, the inclined prices of crude oil affected the global energy markets causing the price of natural gas to rise. Given the supply disruptions and rise in hoarding activities for the coming winter season have caused the price graph of natural gas to incline. The spot price of natural gas averaged around 40 USD/mWh in September '23 in the Chinese domestic market.

Europe

During the start of the third quarter, the price trend for natural gas were low yet stable, given the steady demand-supply dynamics of the region. However, with Russia announcing production cuts and sharply decreasing its supply to the Eurozone led to a drastic rise in the price trend for natural gas.

Since the Euro got weak against the Dollar, the imports became expensive again, adding to the energy bills of the region. Moreover, the curtailed supplies from Australia, given the labor strikes at two of its major LNG ports, affected the global inventories, and thus, the natural gas prices increased in the European regional market.

North America

In line with the global sentiments, the price graph for natural gas recorded a series of inclines during the said period. Despite the rising production output of the USA, the market equilibrium was still disturbed as the downstream demands rose at a pace much faster than the production rates. Further, the strikes at Australian ports curtailed global supplies, causing the prices to rise. The oil cuts by various leading suppliers aided this price incline. Hence, the price trend for natural gas inclined in the US domestic market during Q3'23.

Analyst Insight

According to Procurement Resource, the price trend for natural gas are likely to rise further in the coming months, given the rise in demands considering the approaching winter months and the constricted global supplies.

Natural Gas Price Trend for the First Half of 2023

Asia

Natural Gas experienced mixed price trends in the first half of the year 2023. Demands from the consuming industrial, residential, fuel, chemical, transportation, etc. sectors drove the price trends as the supplies were almost unrestricted throughout the said period. Inventories were completely stacked and overfilled. Both major Asian consumers, namely India and China, continued to have access to cheaper Russian energy supplies even during sanctions, which also influenced the low swinging price patterns.

In China, the first quarter was influenced by sluggish market sentiments. However, the demand started rising in the middle of the second quarter from the residential sector. The slow-paced industrial recovery in the post-lockdown times kept industrial Natural Gas usage at bay. But the, domestic consumption provided some much-needed cost support to Chinese Natural Gas prices in the second quarter.

Europe

European Natural Gas prices sought some stabilization; after the supply chains were restored and new trade routes were developed, a continuous depreciation was observed in both quarters of H1’23. In Germany, Natural Gas prices depreciated by around 16% in the first quarter and by around 20% in the second quarter. However, a sudden jump was observed at the time of the quarter shift because of the rapidly normalizing manufacturing sector.

North America

The North American Natural Gas market mimicked the Asian Natural Gas market trends during H1’23. The prices first depreciated thoroughly from the beginning of the first quarter to the middle of the second. However, a rise in market demands in the latter half of Q2’23 boosted the market sentiments and escalated the prices in April and June. Overall, the Natural Gas market remained anchored in the American region.

Analyst Insight

According to Procurement Resource, with the rising economic uncertainties and disparities, Natural Gas prices are expected to continue fluctuating as per uncertain market demands.

Natural Gas Price Trend for Q2, Q3 and Q4 of 2022

Asia Pacific

The prices of natural gas shot in the second quarter of 2022 as the Asian Pacific region experienced a skyrocketing demand from the petrochemical industries. The supply was also weak in front of the increased demand. The region expanded its production costs and led to an inclining price trend of natural gas. In the later months of the third quarter, the prices dropped given the steep decline in the import prices. The same downward trend continued in the fourth quarter where the natural gas prices declined as the market was uncertain and many countries employed restrictions on imports from China.

Europe

Natural gas prices reached an astounding high during the second quarter owing to the Russian invasion of Ukraine and the retaliatory Western sanctions on Russian exports. Despite the high prices, the surge in energy production and utility costs, the market saw high buying potential. However, in the fourth quarter, the demand settled causing the inventories to rise, hence, the purchasing trend of the commodity declined. The region also moved towards sustainable ways of electricity production which further contributed to the declining price trend of natural gas.

North America

Due to the market disruptions caused by Russia’s invasion of Ukraine, natural gas prices surged in the second quarter of 2022. The trend continued till the later months of the third quarter, only to decline in the last month as the demand for natural gas in the domestic region fell. The extremely hot weather, restricted supplies, and decline in the fuel demand of the US region, gas prices declined in the fourth quarter too.

Analyst Insight

The prices of Natural Gas are estimated to showcase a declining trend in the upcoming quarters. The poor purchasing potential of buyers, declining demand from end-user industries, and extreme weather conditions will decrease the prices of natural gas.

Natural Gas Price Trend for the Q1 of 2022

Asia

Natural gas prices in India started to rise by the end of January with prices increasing from 296 INR/MMBtu to 346 INR/MMBtu. In February, the prices further increased to 373 INR/MMBtu but then witnessed a sharp decline to 297 INR/MMBtu by mid-Feb. Natural gas prices started to climb again and reached 363 INR/MMBtu by the end of the month.

In March, the natural gas market observed a few ups and downs but the overall market dynamics remained strong with prices increasing to 425 INR/MMBtu by the end of the quarter. International gas prices have risen in recent months as a result of low storage inventories, strong demand in Asia, unusual weather patterns, including a cold European spring and a hot Asian summer, and supply disruptions. The price rally is being fueled further by tensions between Russia and Ukraine, as well as uncertainty about Russian gas supplies to central Europe.

Europe

Natural gas prices in Europe reached new highs as fighting in Ukraine threatened to reduce Russian supplies of the heating and power-generation fuel. Russian gas continues to flow in large quantities through Ukraine to customers in Europe. However, traders are concerned that those supplies may be cut off as Russia intensifies its fighting, and that Russian gas supplied via other pipeline routes may be disrupted as a result of Western sanctions imposed on Moscow.

Alternatives such as liquefied natural gas from the United States would struggle to fill the void left by Russian exports, and would come at a high cost as Europe competes with other gas-consuming regions for limited supplies. On March 7, the price of natural gas in Europe reached an all-time high, briefly reaching 345 EUR/MWh. In terms of British thermal units of energy, that equates to 600 USD/barrel of oil.

North America

Spot natural gas prices at the national benchmark averaged 4.38 USD/MMBtu in January, up from an average of 3.76 USD/MMBtu in December. Natural gas prices are likely to remain volatile in the coming months, and how temperatures affect natural gas demand in February and March will be a key factor in determining how inventories end the withdrawal season, which will affect natural gas price formation in the coming months.

For the Fourth Quarter of 2021

Asia

Natural gas prices in India in December 2021 were Rs. 341.6/MMBtu. Under the domestic gas price regime, India hiked the domestic price by 62% in 2021, from 1.79 USD/MMBtu to 2.9 USD/MMBtu. The new price, which took effect on October 1, raised the electricity prices from gas-fired power plants as well as the cost of fertiliser manufacturing. When growth resumed year, particularly in Asian markets, demand soared, and energy producers strained to keep up, driving up the natural gas prices.

In December 2021, China's average pipeline gas import price was 6.15 USD/MMBtu, down marginally from 6.22 USD/MMBtu from the previous month as according to the General Administration of Customs, China's total natural gas imports climbed by 19.9% year on year, with pipeline gas imports increasing by more than 22% and LNG imports increasing by more than 18%.

In October 2021, natural gas prices reached new highs. Prices for Australian thermal coal, European and Asian spot natural gas were three, four, and two times higher in February than in January. The rise in prices reflected a sharp rise in demand for electricity generation, particularly in China and India, as well as supply constraints, owing in part to bad weather.

Europe

A chilly winter in Europe resulted in higher gas demand and a quick depletion of storage facilities. Another reason was that despite the rising importance of renewable energy sources in Europe this year, wind energy generation was insufficient. Alongside, LNG supplies were redistributed in favour of premium Asian customers. Fall in European output also resulted in price hike. The price in December 2021 was noted to be at peak of around 182.3 EUR/MWh.

North America

Natural gas prices fell to their lowest point in Q4 as compared to October 2021. Production disruptions caused by Hurricane Ida's landfall, combined with rising energy demand and a lack of infrastructure, resulted in prices more than doubling since the beginning of the year in October. The prices in the United States fell to their lowest level in over a month near the end of Q4 due to forecasts of a warmer-than-expected winter forecast. Due to decreased contract settlements and weak futures in worldwide markets, Henry Hub Natural Gas prices fell to 3.7 USD/MMBtu in December.

South America

LNG imports into South America spiked, driven by Brazil and Argentina. Gas supply contracts between state-owned oil and distribution corporations expired in December. Petrobras proposed a four-year contract with a 50% gas price adjustment, which was later suspended by the Brazilian state court. However, this price hike would’ve caused an increase in natural gas price from 8 to 12 USD/MMBtu.

For First, Second and Third Quarters of 2021

Asia

Despite the chilly weather in the North-East Asian region, LNG demand in Asia remained high in the first half of the quarter. In January 2021, China and Japan were jointly responsible for a rise of 162.43 Bcf on a year-over-year basis.

To accommodate rising demand, Japan's JERA purchased a total of 3 MMT from November 2020 to February 2021. Due to the absence of the requisite transportation freights, supply remained restricted. In February, the average price of LNG for imports to China hit a 14-month high of 8.4 USD/MMBtu, up from 7.36 USD/MMBtu in January.

Due to planned and unanticipated turnarounds in Australia, Malaysia, and Indonesia, LNG supplies were limited in the second quarter. The commencement of production at Australia's Ichthys LNG Plant was postponed due to technical concerns. Throughout the quarter, demand remained strong, and sentiments were buoyed by China's CNOOC's request for around 10 LNG cargoes between July and March 2022, indicating the country's strong economic growth.

Furthermore, on a year-over-year basis, June LNG shipments to Japan increased by 18%, while shipments to China increased by 27%. The average LNG price for July deliveries in the Northeast Asian region crossed 12.10 USD/MMBtu during a particular week in June, up around 1.15 USD from the previous week's values.

Europe

Natural gas prices nearly five folded from their lows in 2020 to hit a new high of 15.8 USD/MMBtu, the highest on record. Several British energy companies have gone bankrupt as a result of the gas pricing crisis. Nine companies are said to have gone out of business in September alone. At the end of Q3-2021, Germany's household gas prices were raised by 11.5%, The hike of 11.5 percent will add 172 euros to the bills of 310,000 homes, who already pay 1,516 euros ($1,775.54) for 20,000 kilowatt hours (kWh) of yearly gas use.

Factors driving costs include Asia's economic rebound, which has sent linked coal and gas prices surging, political agendas will to raise the cost of European carbon permits, increased oil prices, a drop in renewable energy generation in Germany due to weather, and a planned phase-out of coal power stations.

North America

LNG supplies in the North American region have remained high in recent quarters, with all six U.S. LNG export facilities reported to be operating at maximum capacity due to increased export demand from the Asia-Pacific region. Later in the first quarter, however, US LNG suppliers were reportedly moving their shipments to Europe since it was more cost-effective for them to sell into Europe than Asia due to lower shipping costs, despite the fact that prices in Europe and Asia are still significantly higher than in the Americas. Unprecedented frigid weather conditions in the Gulf of Mexico region of the United States boosted local LNG demand for heating.

Volatility arose early in 2021 as a result of near-record-high spot prices amid February's harsh winter weather, prices increased throughout the year, rising from 2.62 USD/MMBtu in March to 5.51 USD/MMBtu in October. The energy crisis had been exacerbated by a number of causes, including demand rebounding while supply remained tight. In 2021, the wholesale spot price for natural gas in Louisiana (the U.S. benchmark) averaged 3.89 USD/MMBtu, nearly double the 2020 average. A strong winter storm in the central United States in mid-February raised energy usage while also disrupting electricity supplies.

Latin America

In Latin America, ex-ship prices were above 9 USD/MMBtu. The country increased its import of LNG by two times due to the deregulation of gas market and infrastructure buildout to receive LNG also due to natural factors such as drought which directly affected the efficiency of country's hydropower generation capacity (Brazil's 70% energy is generated via hydropower). The price in Brazil was 0.170 USD/kWh for households and 0.063 USD/kWh for businesses in the month of June.

For the Year 2020

Asia

As the winter season hit the continent in Q4 2020, the North-eastern Asia region saw an unprecedented rise in LNG demand, generating an unanticipated shrinkage in regional supplies, which was worsened by a lack of transportation availability. The rapid increase in demand, production concerns in Australia and Malaysia, two main exporters to the Asian market, and unnecessary delays due to traffic congestion at the Panama Canal all contributed to a supply shortage. A combination of these factors prompted a five-fold increase in LNG prices across Asia since the second quarter, when the pandemic drove them below USD 2.00 per MMBtu owing to COVID-related interruptions.

Petro China and China National Offshore Oil Corp. announced a joint venture in December. Lower-than-average temperatures and increased manufacturing activity boosted regional demand, prompting CNOOC to organise global bids for LNG quantities on Shanghai Petroleum and Natural Gas Exchange Shanghai.

In November, the Japan-Korea Marker (JKM) benchmark increased to USD 6.8/MMBtu, a new high. In addition, despite plunging below USD 2/MMBtu at points in May, the UK benchmark NBP and TTF in the Netherlands were trading in the USD 5-6/MMBtu region. Positive revisions in worldwide pricing as we enter the winter months suggest that LNG demand will continue to rise in the coming months. In 2021, Asian LNG demand is expected to be boosted by India's increased focus on converting from coal to gas, which would be joined by China and other Asian countries.

Europe

In early 2020, demand for natural gas and energy in general decreased as a result of the Covid-19 pandemic and its accompanying restrictions. Sweden had the highest residential natural gas price in the European Union in 2020, at more than 9 Euro cents/kWh, for an annual usage of more than 200 GJ. Portugal had the second highest residential gas price, at 7 Euro cents/kWh. Latvia, on the other hand, had the cheapest pricing in this range, at 2.5 Euro cents/kWh.

Since 2008, the price has decreased for German industrial customers. Prices for users with yearly consumption higher than 10,000 GJ but less than 100,000 GJ declined from 4.72 c Euro cents/kWh in 2008 to 2.89 Euro cents/kWh in 2020. Despite the fact that industry costs have been decreasing, German households have had to dig deeper into their purses to pay their gas bills. Gas costs for residential customers in Europe were roughly double those for industrial customers. Households in Germany with annual use of less than 200 GJ paid 6.1 Euro cents/kWh. Households in the Netherlands were the ones who had to pay the most.

North America

2020 prices at the benchmark Henry Hub reached their lowest level in 25 years due to warm weather and a slowdown in economic activity induced by the COVID pandemic. The average daily spot price at Henry Hub in 2020 was $1.9988/MMBtu, the lowest yearly average since 1995's $1.708/MMBtu. According to the EIA, natural gas prices fell steadily until the summer of 2020 as LNG export demand dried up and the warm spring lowered heating demand. According to the federal data office, LNG demand increased in the second half of the year, boosting natural gas prices.

Gas consumption for heating fell 2% in 2020, but consumption for electricity grew 2% as low costs encouraged power generators to use gas instead of coal, according to the EIA. Gas demand for power reached historic highs in July 2020, because to a combination of cheap summer costs and high summer temperatures.

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