The most recent forecast for the US natural gas market - JPMorgan

In a recent letter to investors, commodity analysts at JPMorgan changed their view for the US natural gas market.

As of right now, analysts are projecting a situation in which natural gas prices would need to stay "lower for longer," especially through April, in order to account for a storage surplus and a dimmed demand picture, among other factors.

The JPMorgan team stated that they have increased their storage expectation for the end-of-October natural gas storage prediction by about 140 billion cubic feet (Bcf) due to the anticipated impact of the weather in March and April.

This modification places JPM's forecast end-of-October storage levels close to 4.4 trillion cubic feet (Tcf), analysts said, assuming no changes in production levels.

Prices must continue to decline in order to limit the rate of injections and prevent congestion, especially at salt cavern facilities in the South Central area where there is an excess of storage.

Furthermore, it is anticipated that the lower-for-longer pricing situation would fundamentally alter the natural gas production profile for the summer of 2024 and the year 2025.

"Given this supply-side correction and the beginning of new LNG feed gas demand by Venture Global's Plaquemines facility, we remain bullish on the 2H24 price," they continued.

JPMorgan strategists are still optimistic about 2025, but expressing caution about possible short-term threats.

"We are strong proponents of upside potential for the 2025 price, and we are even more so now than we were back in November when we first announced our calendar strip price forecast," analysts stated.

Their bullish assessment is not predicated on possible large production growth over 2024, but rather on worries about midstream challenges at Henry Hub.

However, they cautioned that a rise in producer hedging in the near run may provide problems for the increasing price trend projected for 2025.

(Sources: investing.com, reuters.com)