Investing.com-UBS warned of near-term downside risks to U.S. prices due to milder weather forecasts for February, but raised its second-half price forecasts for rising liquefied natural gas exports and tightening of inventories.
Colder-than-average winter weather in the U.S. has driven natural gas demand to its highest level since late 2022 and has lifted prices. The freezes have disrupted supplies, while the shutdown of the Freeport LNG export terminal has exacerbated volatility. UBS now expects natural gas inventories to end the withdrawal season in March at 1.7-1.8 trillion cubic feet, slightly below the five-year average.
Despite the potential for price pressure in the coming weeks, UBS revised its price forecasts in September and December by $0.20 per million British thermal units, anticipating a surge in new export terminals, including Plaque Mines and Corpus Christi Stage 3, in addition to Mexican LNG facilities . UBS is forecasting around 3.7 TCF by the end of October, down from a previous forecast of 3.9 TCF.
While natural gas prices are constructive for UBS over the longer term, high rolling costs and short-term risks are keeping the bank on the sidelines for now with no immediate investment recommendations.
