Government energy analysts increased their outlook for natural gas production versus last month’s estimate. The higher forecast reflects increased gas prices in the second half of 2020.
In its monthly Short-Term Energy Outlook (STEO), the Energy Information Agency (EIA) calls for Henry Hub spot prices to remain higher than $3.00/MMBtu through 2021, averaging $3.19/MMBtu.
This would be $1.02 MMBtu/d higher than in 2020. The higher price forecast month over month lends to the agency’s higher production estimate for 2021.
The chart above shows the major revision the EIA made for gas production versus its August STEO report. The current (red dotted line) forecast lets production drop to near 86 Bcf/d in March 2021, before recovering to about 87.5 Bcf/d by the end of 2021. The EIA’s latest change of a “flatter” production profile is much more in-line with what AEGIS has been expecting for a few months. We believe gas production will be more resilient than some have expected. See our commentary about our forecast here.