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Freeport LNG Outage Leads to Shift in US Natural Gas Supply and Demand Balance, EIA Reports
06:35 AM EDT, 07/20/2022 (MT Newswires) -- The outage at the Freeport liquefied natural gas plant has caused a shift in the US natural gas supply and demand balance, as the facility's shutdown reduced US export capacity and led to a drop in the US benchmark Henry Hub spot price, the US Energy Information Administration reported Tuesday.
Following the full shutdown of Freeport LNG on June 8, US export capacity fell by an estimated 2.0 billion cubic feet per day, while the Henry Hub price dropped by $1.27 per million British thermal units to $8.16/MMBtu on June 9, the EIA said. The Henry Hub price continued to decline through the end of June and ended the month at $6.54/MMBtu.
The drop in prices was attributed to the decrease in US gas exports due to the outage at the Texas LNG facility, which put downward pressure on gas prices, the agency said. The EIA forecast that the Henry Hub price will continue declining from its June average of $7.70/MMBtu to an average of $5.97/MMBtu in the second half of the year.
As gas prices fall, natural gas consumption in the industrial sector and electric power sector is seen to rise, somewhat offsetting lower total demand, composed of consumption plus exports, according to the agency.