Natural gas prices in the U.S. have been performing better than gas prices elsewhere in the world amid the coronavirus outbreak that originated in China, according to London-based Capital Economics on Friday.
Although the daily spot price at the Henry Hub national benchmark, which is used as a pricing point of natural gas in the U.S. to set the spot and future prices, has slumped due to concerns related to coronavirus, "it has fared better than natural gas prices elsewhere," the economic research consultancy firm said in a statement.
The consultancy company said the price of U.S. natural gas will continue to hold up better than both European natural gas and Asian LNG prices.
The impact of coronavirus on U.S.' liquefied natural Gas (LNG) exports is likely to be small because the country has not been exporting any LNG to China even before the outbreak of coronavirus due to China’s 25% tariffs on U.S. LNG.
However, the outbreak may hit spot purchases of U.S. LNG by South Korea and Japan, which are the first and third-largest importers of U.S. LNG, respectively.
Nevertheless, the impact U.S. LNG exports in general should be limited as most U.S. LNG shipments are covered by long-term contracts, Capital Economics said.
The company also added that domestic gas demand in the U.S. is anticipated to increase as the growth of the American economy is expected to pick up pace in the second half of 2020.
"All told, we expect the average price of Henry Hub to fall by around 10% this year, from $2.5 per million British thermal unit (mBtu) to $2.2 per mBtu. We forecast a much larger decline, of around 30%, in European TTF and Asian spot LNG prices," the statement said.
By Ovunc Kutlu