Natural Gas Price Forecast: Will the Market Rebound in 2024?

After experiencing a tumultuous two years partially caused by Russia’s natural gas supply cuts to Europe following its invasion of Ukraine, coupled with a shortage in renewable energy generation and a surge in energy demand post-COVID reopening, natural gas prices may have found their footing.

Slowing economic activity, as central banks stepped up their interest rate hike measures to fight high inflation, eased energy demand, which subsequently helped to cool energy prices, including natural gas prices, from their record high in 2022.

By mid-2024, natural gas prices largely stabilized, hovering more than 80% below their record levels. Subdued global economic growth and warmer weather limited heating demand early this year. Adding to the headwinds is China’s underperforming economic recovery after it abandoned its three-year strict COVID-19 restrictions in late 2022.

However, risks to the upside remain for natural gas prices as geopolitical tensions in the Middle East and the Russia-Ukraine war show little signs of abating, if not intensifying. Climate change has also intensified summer heat in many parts of the world, potentially increasing cooling demand.

So, what is the natural gas price forecast for 2024, 2025, and beyond? Let’s dive into short and long-term natural gas predictions from expert analysts.

Table of Contents Table of Contents

1. Key Takeaways
2. Natural Gas Price Predictions Summary
3. Natural Gas in 2023: Prices off Multi-Year Highs
4. Tailwind & Headwind for Natural Gas Price in 2024
5. Natural Gas Price Forecast for 2024
6. Natural Gas Price Forecast for 2025
7. Long-Term Natural Gas Price Predictions for the Next 5 Years
8. The Bottom Line
9. FAQs
10. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Natural Gas Price Predictions Summary
3. Natural Gas in 2023: Prices off Multi-Year Highs
Show Full Guide
4. Tailwind & Headwind for Natural Gas Price in 2024
5. Natural Gas Price Forecast for 2024
6. Natural Gas Price Forecast for 2025
7. Long-Term Natural Gas Price Predictions for the Next 5 Years
8. The Bottom Line
9. FAQs
10. References

Natural Gas Price Predictions Summary

Natural Gas in 2023: Prices off Multi-Year Highs

A warmer winter which reduced demand for heating and Europe’s push to manage demand as well as boost supply security amid Russia’s supply cuts, had brought down natural gas prices from their highs by the end of 2022.

According to the EU’s report, the block’s gas storage was 94.9% filled by November 1, 2022, and was still at 83.4% by December 31, 2022, well above the target of 80%. To fill up the storage and make up for the loss, the EU stepped up LNG imports from the US and Asia following Russia’s decision to stop gas supplies via Europe’s key gas pipeline Nord Stream 1 in late August 2022.

LNG is natural gas chilled into liquid under? -160 degrees Celsius to enable the fuel to be transported through the sea. Once reaching the destination, LNG will be processed into gas at regasification facilities, and then it is distributed via pipeline to customers.

On the demand side, EU member states also agreed to reduce their gas consumption by 19% between August 2022 and January 2023. These measures put significant pressure on natural gas prices.

By the end of 2022, Dutch TTF dropped 77.5% to €76.3/Mwh, from a record high of €336.19/Mwh on August 26, 2022.

In the same period, the price of Japan Korea Marker (JKM), the Asia LNG benchmark assessed by S&P Global Platts, also fell nearly 58% to $29.5/MMBtu from $69.95/MMBtu in August 2022.?

Meanwhile, the price of US natural gas at Henry Hub fell by 55% to $4.47/MMBtu by the end of 2022, down from a multi-year high of $9.987/MMBtu in August. Henry Hub is a major natural gas pipeline near Erath, Louisiana, that serves as the official delivery point for futures contracts on the New York Mercantile Exchange (NYMEX).

Natural gas prices continued a downward trend in 2023, pressured by lackluster demand.

According to the International Energy Agency (IEA), global gas consumption only increased by 0.5% in 2023, which was insufficient to offset losses in 2022, when demand fell 1.5%.

IEA wrote in its Gas Market Report Q1 2024:

“The rapid expansion of renewables and improving nuclear availability weighed on natural gas demand in Europe and mature markets in Asia, driving prices lower. Mild winter weather conditions together with gas-saving measures also reduced gas use in the residential and commercial sectors.”

China, North America, and gas-rich regions in Africa and the Middle East were the primary drivers of demand increase in 2023.

According to the IEA’s data, China’s natural gas consumption rose 7% last year, helping the nation reclaim its position as the world’s largest LNG importer. In contrast, efficiency policies lowered natural gas usage in Europe by 7%, the lowest level since 1995.

Throughout 2023, Dutch TTF recorded the steepest decline, falling 67.5% to $13.11/MMBtu from $40.34 in 2022, according to World Bank’s data on March 4.

The US natural gas price also fell about 60% to average at $2.54/MMBtu in 2023, from $6.37 in 2022.

Meanwhile, Japan’s LNG spot price saw the smallest drop, decreasing about 21% to $14.39/MMBtu in 2023 from $18.43 in the previous year.

Tailwind & Headwind for Natural Gas Price in 2024

So far, natural gas prices have been mixed. At the time of writing on July 25, Dutch TTF was trading around €31.9/Mwh, falling about 1.3% year-to-date (YTD) and more than 90% below its record price of over €330 per megawatt-hour (MWh).

Asian LNG was trading more than 5% higher from the start of the year at $12.11/MMBtu on July 25, while the US natural gas price has dropped more than 9% so far this year to trade at around $2.276MMBtu.

ANZ Research’s analysts David Hynes and Soni Kumari wrote in a note on July 18, 2024:

“Global gas prices appear to have found a base, as subdued demand is met by ongoing supply issues. Fears of energy shortages appear to have abated. Warmer weather and subdued economic activity have allowed consumers to restock after two tumultuous years. Supply and demand look evenly balanced in 2024.”

Before we dive into the natural gas price forecast, we explore what factors will drive natural gas prices this year.

Demand Growth to Accelerate

In its Gas Market Q3 Report, IEA forecast that global gas demand could grow by 2.5% for the full year of 2024, compared to 0.5% in 2023. Fast-growing markets in Asia-Pacific and gas-rich countries in Africa and the Middle East would spur the demand.

In the first half of 2024, Asia accounted for around 60% of the increase in global gas demand, driven by demand in both China and India, which increased by just over 10% year-over-year (y-o-y), according to the IEA report.

From 2022 to 2023, Asian buyers faced fierce competition for LNG cargoes against European buyers who scrambled to shore up inventories after Russia cut supplies to the continent. However, LNG has since flowed back to Asia, where countries have patchy access to pipeline gas.

LNG is natural gas chilled to below 160 degrees Celcius to change it into a liquid for easy transportation. Once it reaches its destination, LNG is processed back into gas at a regasification unit before being distributed through a pipeline to customers.

BMI, a country and industry risk research company under Fitch Solutions, in a note on June 20, said the short-term outlook for Asia LNG demand is mixed. LNG may face downward pressure from Asia’s major economies, China and India whose economic growth is expected to soften.

On the other hand, economic growth is seen as robust in South and Southeast Asian countries, such as Bangladesh, Pakistan, Thailand, and the Philippines.

“Although these markets represent only a small share of the region’s LNG imports (accounting for little more than 10% of the regional total this year), their economic and demographic fundamentals are strongly supportive of increased energy consumption and LNG demand ? growth over the coming decade,” according to BMI.

By 2030, BMI anticipated that Thailand, Pakistan, and Bangladesh would be among the fastest-growing import markets in Asia by volume. These countries’ imports will bolster the significant volume increases from India and China, modest growth in South Korea, and declines in Japan.

BMI noted that the increasing use of renewable energy, coupled with the restart of nuclear capacity and improved energy efficiency, is anticipated to reduce LNG imports by Japan, the world’s second-largest LNG importer.

Lower prices were expected to attract Chinese buyers to increase imports. BMI forecasts LNG demand from China, the world’s largest importer, to grow by 6.5% in 2024 YoY, driven by an anticipated surge in demand from industry and power sectors. In the first half of 2024, China’s gas usage rose by 12.5% YoY to 58 billion cubic meters (bcm), partly due to seasonal winter demand in the first quarter.

“We expect (China) natural gas consumption to ease in the second quarter, corresponding to a decline in seasonal demand for heating purposes. However, gas consumption could still find some support from summer demand growth driven by power generation needs as temperatures begin to rise in the late second and third quarters.”

Furthermore, IEA anticipated that robust demand growth from Asia and other gas-rich countries in Africa, the Middle East, and North America could offset a decline in European gas consumption. The European Union aims to halve overall natural gas consumption by 2030 as part of its strategy to reduce dependence on fossil fuels.

Global LNG Supply Growth Limited

Despite high production growth in Africa and the United States, which surpassed Australia and Qatar as the world’s top LNG exporters in 2023, global natural gas supply growth would be capped by a restricted increase in LNG supply.

In its Gas Report for Q2, IEA revised global LNG supply growth for 2024 downward to 3% from 3.5% in the Gas Report for Q1 due to multiple causes, including potential delays in starting up new liquefaction plans and geopolitical tension.

The agency wrote in its quarterly report:

“Potential start-up delays at new liquefaction plants, a tense geopolitical context, worsening feed gas issues at legacy projects and shipping constraints all represent downward risks to the current outlook.”

Unplanned maintenance, either due to weather, technical, or regulatory reasons, has affected several key producers, such as Australia and the US.

LNG exports from Australia, the world’s third largest LNG exporter, are expected to fall to 97 billion cubic meters (bcm) in 2024 from 100bcm in 2023 and a record high of 101bcm in 2022. The anticipated fall was due to the feed gas supply delays for the Darwin LNG project following the loss of gas supply from the Bayu-Undan gas field at Timor Leste waters, according to BMI in a note on April 12. The Bayu-Undan field produces dry natural gas and exports the gas through a pipeline to Darwin LNG.

The shutdown of LNG production trains at Northwest Shelf (NWS) also contributes to the lower Australia’s LNG exports this year, BMI said.

Meanwhile, ANZ Research in a note on May 30 expected global LNG supply to remain flat in 2024 after rising about 1.5% in 2023 on a slight drop in production from projects in the Pacific Basin. The drop will be off by small gains in the Middle East & Africa region and the Atlantic Basin.

ANZ Research’s David Hynes and Soni Kumari wrote:

“This should leave the LNG market finely balanced. However, we see the risk around demand remaining firmly on the upside. Further, above average temperatures and more curtailment to renewable energy sources would quickly tighten the market and push global gas prices higher.”

IEA expects LNG supply growth to accelerate year-on-year in the second half of 2024, following a modest 2% increase, or around six bcm, in the first six months of the year as new capacity comes online.

Most of the new LNG supply will come from the United States, both from the expansion of existing facilities and new plants starting operations. These include the expansion of Freeport LNG, the ramp-up of Plaquemines LNG Phase 1 over the summer, and the anticipated start-up of Corpus Christi Stage 3 near the end of 2024, according to the IEA.

In addition to new facilities in the US, IEA expected the Tortue floating LNG (FLNG) plant off the coast of West Africa to come online in the fourth quarter of 2024.

Ban on Russia’s Gas Exports and Projects

On June 26, European Union ministers approved a ban on re-exports of Russian LNG in EU waters and prohibited new investments and services in LNG production projects in Russia. These restrictions are part of the bloc’s 14th sanctions package, aimed at turning off the tap on Russia’s revenue from energy exports.

According to the EU, Russian gas had quietly returned to Europe, accounting for 18% of the EU imports in the first months of 2024. The uptick was largely driven by a growing inflow of Russian LNG to Europe, with more than 20% of Russian LNG being re-exported to other parts of the world.

“We expect that the ban on trans-shipments will have no repercussions on the EU’s security of supply, nor on the price of LNG on the global market, because Russia’s LNG production is currently only a fraction of the global supply. The ban will however deal a blow to Russia’s purse,” said Josep Borrell, EU’s High Representative for Foreign Affairs and Security Policy in the statement.

According to ANZ Research on April 24, Russian gas, both in LNG and pipeline, accounted for 13% of Europe’s overall supplies last year, down from 40% in 2021. Europe imported 14.16 mt LNG in 2023.

While any Russian gas bans would result in more Russian LNG cargoes moving to Asia, freeing up Asian cargo to enter Europe, Hynes and Kumari predicted that trade flows would be disrupted until they adjusted.

Hynes and Kumari said:

“Any ban could see upward pressure on the European domestic gas price. If that resulted in gas prices moving ahead of LNG, consumers could choose to switch to LNG. Further upside is possible if European gas prices rise during the northern summer, which would entice more spot cargo flows to the continent.”

They added that the ban on investments in Russia’s new LNG projects could hamper Russia’s plan to add 100 million tons of LNG capacity by 2030. Prior to the EU sanctions on Russia’s LNG project, the US expanded sanctions against the construction of Russia’s Arctic 2 LNG, which the US said relies on “foreign service companies’ technology and maritime logistics support.”

Arctic 2 LNG, developed by Novatek, is expected to be Russia’s biggest LNG facility.

“Russia is now facing challenges securing the vessels needed to transport the LNG as well as hurdles finalizing the long-term contracts for these new projects,” wrote ANZ Research’s Hynes and Kumari in an April 24 note.

Rystad Energy projected that Russia would miss its target of 100mt LNG capacity by as much as 60mt. It anticipated Russia to produce 34mt of LNG in 2024, up from 31mt in 2023 owing to the commissioning of Arctic 2 train 1.

Geopolitical Risks

Heightened geopolitical tension, particularly with the ongoing war in Ukraine and disruption of shipping on the Red Sea, pose risks to LNG supply.

Russia’s LNG exports face risks of disruptions as Ukraine broadens its strategy of attacking Russian targets far from the war’s frontlines, said ANZ Research Hynes and Kumari. In January, Novatek was forced to suspend the operation of the Ust-Luga gas terminal on the Baltic Sea after it was hit by a drone attack.

Over the last months, security in the Red Sea has worsened due to continuous attacks on vessels by the Yemen-based Houthi militia. These attacks are in support of Palestine in the ongoing conflict between the Palestinian Hamas Group and Israel.

Attacks continue, with the latest incident involving a vessel attacked by an Uncrewed Aerial System (UAS) and an Uncrewed Surface Vessel (USV) northwest of Al Mukha, Yemen, on July 20, the United Kingdom Maritime Trade Operation (UKMTO) reported. The vessel and crew were safe.

The attacks have disrupted global trade, posing risks to LNG supply, said ANZ Research, adding that In 2023, around 15.5mt of LNG arrived in Europe from the Middle East via the Red Sea. This represented around 13% of Europe’s total LNG imports.

Hynes and Kumari added:

“Avoiding the Red Sea means re-routing vessels around Africa’s Cape of Good Hope, adding about 12.5 days to the voyage each way. However, this may not have an impact until European gas storage has diminished enough to force panic buying before the next heating season.” ?

US Gas Production

During the energy crisis in 2022, the United States’ natural gas production helped Europe plug a deficit from Russia’s supply cuts, becoming the continent’s largest supplier.

Data from a not-for-profit international organization, CEDIGAZ, as cited by EIA, showed that the US supplied 48% of total European LNG imports in 2023, compared to 44% in 2022 and 27% in 2021.

Last year, the country produced a record 103 billion cubic feet (bcf) per day, up four bcf/day from an already record level in 2022, according to IEA, but production growth was expected to slow this year.

The US Energy Information Administration (EIA) predicted in July that the country’s dry natural gas production could average 103.5 Bcf/d in 2024, marginally unchanged from about 103.8 bcf in 2023. According to the agency, output will increase to 105 bcf/d in 2025.?

Natural Gas Price Forecast for 2024

While analysts only offer natural gas price outlook for certain markets, they generally expected prices to trend down in 2024.

Osama Rizvi, Energy and Economic analyst at Primary Vision Network, told Techopedia that the chances of another natural gas price spike are thin due to sufficient gas supply across the world and the global economy remaining in a slowdown.

However, Rizvi added, answering Techopedia’s question via email:

“If there is further escalation in the Middle East or other regions, then we might see a temporary surge in prices.”

??In its natural gas price forecast for 2024, ANZ Research saw Japan spot LNG price to trade at $11.4/ Million British Thermal Unit (Mmbtu), dropping from $29.1/Mmbtu in 2023.

ANZ Research’s David Hynes and Soni Kumari said in their note on July 18:

“Supply and demand look evenly balanced in 2024. Nevertheless, we still see upside risks to prices. Europe can’t rest on its laurels and must boost LNG imports. China’s demand may exceed expectations with an increasing focus on energy efficiency and emissions.”

They added that risks of disruptions to supply also remain elevated, which should be a floor to prices, with further upside dependent on their severity.

Analysts have diverse natural gas price projections for the European hub Dutch TTF. Dutch bank ING’s forecast on July 16 expected Dutch TTF to trade at an average €30/Mwh in 2024.

On June 27 note, BMI projected the European natural gas prices in 2024 to average €40/Mwh, down from €41.25/Mwh in 2023.

Fitch Ratings was not so optimistic, revising the Dutch TTF natural gas price expectations for 2024 to $10/Mcf in its latest forecast on June 17, from March’s estimate of $12/Mcf. It was also lower from the estimated $13/Mcf in 2023, according to the rating agency.

Meanwhile, ABN-Amro Bank, in its latest gas price prediction released on 25 June, expected the European natural gas prices to reach €40/MMBtu in 2024, rising from €35.2 in 2023.

Economic data provider Trading Economics, as of July 24, also projected the European gas price’s upward trajectory, anticipating the fuel to trade at €36.72/Mwh in 3Q before climbing to €39.12 in the final quarter of 2024.

In the US market, analysts also have mixed views.

Fitch Ratings maintained its natural gas price forecast for Henry Hub in 2024 at $2.50 /Mcf in June, unchanged from its March forecast. However, this was lower than the previous estimate of $3.25/Mcf made in December and $2.80 estimated for 2023.

EIA, in its July outlook, projected Henry Hub’s price to average $2.50/MMBtu in 2024, a downward revision from $2.65/MMBtu in previous forecast in February.

In contrast, as of July 24, Trading Economics expected US natural gas to increase in the last quarters of 2024, trading at $2.7031/MMBtu in 3Q and rising to $2.8466/MMBtu in Q4 2024.

Sharing the upbeat forecast, BMI anticipated Henry Hub to trade at $2.8/MMBtu in 2024, up from $2.66 in 2023.

Natural Gas Price Forecast for 2025

For 2025, natural gas price projections showed a mixed picture, with some analysts expecting prices to fall further. Others were upbeat that the fuel will rebound next year.

Rizvi of Primary Vision Network said without giving a natural gas price forecast in detail:

“Natural gas prices will remain range-bound during 2025. New wave of LNG supply is set to keep the world well supplied.”

In its natural gas price forecast for 2025, ANZ Research predicted Japan’s LNG spot price to rise to $14.1/MMbtu, up from $11.4 in 2024.

For European gas, Dutch lenders ING and ABN-Amro, as well as BMI, projected a downtrend for Dutch TTF

In 2025, BMI anticipated European gas to trade at an average €38/Mwh, down from €40 estimated for 2024, the company said in its weekly note on June 27.

ING expected the Dutch TTF price to decline to €29/Mwh in 2025 from €30 estimated for 2024, according to its forecast on July 16. ABN-Amro projected Dutch TTF to trend lower in 2025, expecting the price to range from €35 to €40/Mwh, compared to projected €40/Mwh in 2024.

Meanwhile, Fitch Ratings maintained its forecast that European gas prices would be steady at ? $10/Mcf in 2025, unchanged from 2024.

Fitch Ratings said in a note on June 17:

“We have maintained all our TTF base-case assumptions. EU gas storage is 68% full, and we believe EU countries will be able to fully refill storage before the heating season, limiting upward price pressure. Nevertheless, we forecast a seasonal increase in prices in autumn, in line with the usual natural gas price seasonality.”

As of July 24, EU gas storage is 83.4% full, according to data from the Swiss Federal Office of Energy.

Trading Economics anticipated that European gas prices would continue to rise in 2025. The data provider predicted that the natural gas price would average €41.69/Mwh in Q1 2025 and rise to €44.42/Mwh in Q2.

For the future of US natural gas prices, Fitch Ratings anticipated Henry Hub to trade higher at $3/Mcf in 2025, up from a projected $2.5/Mcf in 2024.

“US gas production continues to outstrip consumption, although the gap has narrowed. We expect production to decline as a result of announced curtailments. Natural gas prices are extremely volatile and dependent on weather, particularly in the short term,” Fitch Ratings wrote on June 17.

The Energy Information Administration (EIA) has lifted its US natural gas price prediction for 2025 to $3.30 in its July outlook from $2.94/MMBtu estimated in February.

Long-Term Natural Gas Price Predictions for the Next 5 Years

Where Will the Prices Be in 2026-2030?

Beyond 2025, analysts projected natural gas would be in a downtrend.

ING projected the European gas price to decline to €28/MWh in 2026 from €29 anticipated in 2025.

Fitch Ratings anticipated the Dutch TTF price to fall to $8/Mcf in 2026 and $7 in 2027 before dropping further to $5/Mcf in the mid-cycle. The rating agency also projected the Henry Hub price to remain unchanged at $3/Mcf in 2026 from 2025 before falling to $2.75 in 2027. The Henry Hub price was predicted to stabilize at $2.75/Mcf in the mid-term.

Fitch Ratings attributed the decline in natural gas prices to new LNG production capacity from the US and Qatar.

Predicting natural gas prices for the long term is challenging due to a multitude of factors at play. Therefore, a long-term natural gas price forecast for 2030 is not readily available.

On the demand side, natural gas consumption is influenced by the demand for other fossil fuels, notably coal and renewable energy.

Before the war in Ukraine, several countries, including China, had pledged to gradually phase out coal to achieve their net-zero emission targets. However, the soaring natural gas prices in 2022 led to an increase in coal consumption by countries such as China and those in Europe.

The growing role of natural gas in helping transition from fossil fuels to renewables will increase LNG imports by emerging markets in Asia, according to BMI. The company projected that emerging markets in Asia will increase their LNG imports by 118bcm, or 73%, over the coming decade, while developed market imports rise by 7bcm or 3.6%.

BMI wrote:

“Asia is somewhat of a special case in the emphasis it places on natural gas as a bridging fuel in the ongoing energy transition. Governments across the region are actively pursuing a growing role for gas in their energy mixes, seeking to switch away from coal in the power sector, supplant oil in petrochemicals production, raise the use of gas amongst domestic industries and promote the proliferation of city gas markets.”

Primary Vision Network’s Rizvi said that in the long term, the potential for new gas supply is promising.?

He projected that around 200 million tons of new natural gas capacity are expected to come online in the next five years.

In terms of the energy transitions, Rizvi said that LNG will still play an important role in maintaining energy security in many Asian and developing countries. He said:

“So I don’t think LNG is going to go anywhere. It will stay in the picture.”

The Bottom Line

Natural gas prices will continue to face pressure due to constraints in demand growth caused by limited supply growth and ongoing subdued global economic activity.

However, heightened conflicts in the Middle East and Ukraine are contributing to upside risks on prices.

In the long run, the natural gas price trend remains a mixed picture, with multiple factors at play, including geopolitical tensions, US natural gas production, and the role of fuel in helping countries transition to cleaner energy.

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